Ask the Dollar Diva By Dorothy Rosen • Bankrate.com

How can I work with my creditors to get the bills paid off?

Dear Dollar Diva,
I've been out of work for almost a year due to an injury. My bills have stacked up, and I'm unable to pay them. I start a new job tomorrow, but I will not be making close to what I made on my old job. What can I do to work something out with my creditors so I don't lose everything?

The Diva regrets that you've been dealt such a lousy hand.

I don't know what kind of creditors you are dealing with, but the steps to dig yourself out of debt should apply to most of them:

• Make getting your financial house in order a high priority, and understand it's going to take time, energy and organization.

• Make a file folder for each creditor containing the following:

• The bills.

• A record of the dates and amounts paid on the bills.

• A log of every contact you make or attempt to make regarding the debt, including date and time; name and title of person contacted; nature of contact (whether you talked on the phone or left a message on a machine); summary of conversation.

• Set up a master list of everyone you owe money to. Include the name of the lender, the amount, the interest rate and the minimum monthly payment.

• Determine how much after-tax income you will have from the new job and what your bare-bones living expenses are, not counting the debt. Include amounts you need to put aside each month to make quarterly or annual payments, such as insurance and taxes, and a little cushion for any expense you may have forgotten to write down. The difference between what's coming in and what's going out is what you have to pay your debts.

• Estimate what you can pay to each lender.

• Contact each lender, explain your situation, apologize for the late payments and state how much you can afford to pay each month. Put all agreements, negotiations and offers in writing.

If most of your debt is with credit cards and departments stores and so is unsecured, and you're batting zero in your attempts to deal with those lenders, a visit to your local Consumer Credit Counseling Services might help. There's no charge for an initial consultation, so it doesn't hurt to talk to them.

CCCS is funded by credit card companies, which prompted the Diva's "A wolf in sheep's clothing." In spite of that, a counselor can help by getting the collection agencies off your back, and negotiating repayment schedules that you can afford. It will show up on your credit report if you enroll in a CCCS debt consolidation program. However, it sounds like your credit rating has taken such a beating that it shouldn't really matter.

Although the Diva believes that everyone is responsible for paying off his debts, she recognizes that sometimes it's just not possible. If you find yourself in a position where CCCS can't help and you will never be able to clean up your bills, the last resort is bankruptcy. For an overview of Chapter 7 and Chapter 11 bankruptcy rules, see the Diva's "Seduced by the ease of credit."

Search Bankrate.com for other bankruptcy stories; we have a lot of them. A good starting point is "When should you file for bankruptcy."

Anyone without an emergency fund should set one up now. The injury and job loss you've experienced can happen to anybody. Without a fund, the financial chaos can be devastating.

DOROTHY ROSEN has a master's degree in finance, with a specialization in accounting, from the Kellogg Graduate School at Northwestern University in Evanston, Ill. Rosen has more than 15 years of experience in the financial arena, serving in Illinois and Florida as a certified public accountant, financial consultant, expert witness and educator. She is owner of Dorothy Rosen, CPA, a public accounting firm that serves individuals and small businesses.