If foreclosure is looming, might I be better off just selling my house?

You're better off selling the house than having it go to foreclosure. As a general rule, if you can find a buyer who will offer to pay at least what you owe your lender, take the offer. If the offer is for less than the amount you owe your lender, your lender can block the sale. But many lenders will agree to a "short sale," in which the sale brings in less than you owe the lender and the lender agrees to forego the rest. Some lenders require documentation of any financial or medical hardship you are experiencing before agreeing to a short sale.

My utility bill was huge because of a very cold winter. Do I have to pay it all at once?

Maybe not. Many utility companies offer customers an amortization program. This means that if your bills are higher in certain months than others, the company averages your yearly bills so you can spread out the large bills. Also, if you are elderly, disabled, or have a low income, you may be eligible for reduced rates. Ask your utility company.

When can a creditor garnish my wages, place a lien on my house, seize my bank account, or take my tax refund?

For the most part, a creditor must sue you, obtain a court judgment, and then solicit the help of a sheriff or other law enforcement officer to garnish wages. Even then, the maximum the creditor can take is 25% of your net pay, and you can protest that in court if you can't live on only 75% of your wages.

In three situations, your wages may be garnished before you are sued:

• The IRS can take everything but about $100 per week.
• The Department of Education can garnish up to 15% of your wages and a state guarantee agency can garnish up to 10% of your wages if you're in default on a student loan.
• Up to 50% of your wages can be garnished to pay child support or alimony.

To place a lien on your house or empty your bank account, almost all creditors must first sue you, get a judgment, and then use a law enforcement officer. A few types of creditors, such as an unpaid contractor who worked on your house, can put a lien on your house without suing. And the IRS can place a lien or empty your bank account without suing first.

Your tax refund cannot be taken unless the Treasury Department receives such a request from the IRS, the Department of Education, or a child support collection agency.

Can I go to jail for not paying my debts?

Debtors' prisons were eliminated in the United States by 1850. In a few unusual situations, however, you can still be jailed if you:

• willfully violate a court order, especially an order to pay child support
• are convicted of willfully refusing to pay income taxes, or
• are about to conceal yourself or your property to avoid paying a debt for which a creditor has a judgment against you.