Q: I am in a real mess and don’t know what to do. My wife and I have owned our Atlanta home for about seven years.

We refinanced about 2 1/2 years ago in my name only (my credit was bad, but hers was worse) into a 2-year adjustable rate mortgage (ARM) with a 9.5 percent interest rate.

The house is worth about $230,000 and we owe about $210,000 on our mortgage. Our payments were about $2,100 a month which we struggled to make.

The ARM came due several months ago and when I went to refinance, I found out that two of the bad credit card debts my wife had resulted in liens being placed against the house. We are trying to get those settled so we can refinance but in the meantime, our loan adjusted, and now our mortgage is $2,500 per month.

We fell 60 days behind on our mortgage and worked out a repayment plan of $3,000 a month. Even though we are in a repayment plan, the mortgage company says that we are still not current and now my already shaky credit report reflects being 90 days behind on the mortgage.

So, even if we were to get the liens removed, I doubt we could get refinancing due to my credit now being completely in ruins. While we have struggled to make the last three $3000 payments, we simply cannot make the November payment of $3000 and I know on the 10th of the month they will start foreclosure proceedings.

I don’t know what to do. We could file bankruptcy but I know that doesn’t absolve us from paying for the house. What does bankruptcy do for us? Our other choice is to let the bank foreclose on our house, but I am worried they will kick us out before Christmas which would be devastating for my wife and kids.

We could lease a house until we our credit improves and I know we’d be able to buy a house again someday, but every time I mention that to my wife she cries.

The good news, if there is good news, is that I started a new job about six months ago. I earn $110,000 a year and am assured of a bonus of at least $60,000 in March. We bought two new cars in 2001, and they will both be paid off in January which will free up another $1,100 per month.

I feel trapped because I know over the next four months we can easily sort this out but the mortgage company won’t wait that long. What do you suggest, bankruptcy or foreclosure? What are the pros and cons of each? Thanks so much for your help.

A: Yikes. You don’t need me to tell you that you’re in a pickle. But it does sound like you might be able to right the ship by the spring. That’s great news. Now, you just need to find some way to pressure your lender into working with you on this.

Your best bet is to get some emergency housing counseling from the folks at Consumer Credit Counseling Services of Greater Atlanta (www.cccsinc.org). They will offer you some free budgeting counseling, but they may also be able to help you pressure your lender into giving you some more time to work things out on your loan.

If you can work out a plan that will give you some space until January, when at least your car payments will end, you’ll have another $1,100 per month to throw at your mortgage. It should be possible for you to add the amount you’re behind onto the back end of your loan. At nearly 10 percent interest, you’re paying a lot. Then again, you’re 90 days behind on your mortgage. It’s not a pretty picture.

But if you can get the lender to give you 5 months to work things out, your life will start to improve. CCCS should also be able to advise you on what to do with those bad loans your wife has and how to start to improve your credit score.

This isn’t going to be an easy road. But the job you now have, with the income it provides, should help you get back on track. Good luck. I know you can do it!