Buried in credit card debt

Dear Bankruptcy Adviser:
I have a question concerning my debt situation. I owe around $60,000 in credit card debt. I am currently not employed, but working on a business that is not profitable yet and I really have no timeline as to when I will see income flowing in.

My savings are drained and I have been borrowing money from friends to make payments for the past few months. However, it has come to the point where I am no longer able to do this and my monthly payments for all my bills are too high. What would be the best option for my situation?

Should I try a debt consolidation agency, which I've researched might not be the best solution unless I have money to settle; file for bankruptcy or default on all my credit card debt? I'm not sure exactly what happens if I just default and don't file for bankruptcy. Are there any legal implications?
-- Dan

Dear Dan:
The key sentence to your question is: "I am currently not employed ..." While you are trying to get a business off the ground, all your options to pay back your debt are nonexistent without a steady income flow. You need to be careful not to rob Peter to pay Paul, which is the most common comment I hear from clients. Meaning, don't pay your Visa with your MasterCard.

You ask all the right questions as to your options. I will break down your options and explain how these relate to others in similar situations.

Debt consolidation: Any reputable debt consolidation company, or DC, would not take you as a client. You do not have the funds to complete DC programs and will likely make a few payments to the company, which will cover their fees only, and then find it impossible to pay. I feel that DC programs work only when you have large lump sums available to make significant payments to the creditors right away.

DC companies contact the creditors and "establish" settlement terms. But those terms are based on your ability to pay those terms within 12 to 36 months. Unfortunately, I have retained many people who made at least 12 payments into a DC program only to find that the settlement terms changed or that in the two-plus years the creditor has been waiting for payments the balance has increased significantly. Thus, a 20-percent settlement offer increased because the balance also increased.