You can really be in a world of trouble when a debt consolidation agency is a fraud!
First off, let me say that this situation is completely shocking and appalling. I think that the very first thing you need to do is go to the state attorney general's office and file a formal complaint against the debt consolidation service you were using for fraud. Then go to the local sheriff and the Federal Trade Commission. They shouldn't defraud folk and if they snagged you, it's a sure bet that they'll have other people in their system right now too.
Further, while most creditors aren't very friendly once you're in debt, if you can still talk with the creditors rather than a collection agency, I'd call up, ask to talk to a supervisor (try to get as high up the food chain as possible), and explain the situation in as much detail as possible. Having a police report will be critical and you should be prepared to fax a copy of the report to each creditor to help establish the truth of your explanation of non-payment.
I'd request that they waive the last five months of late fees and missed payment fees, explain that you're working on consolidating and addressing your debt issues, have stopped using their service / credit card (if possible), and that you have already budgeted to pay them $177-$180/month to start working down the debt. They might well say "no way", but worst case, at least you'll feel like you took a shot at it, and you may be surprised that they're willing to budge a little bit on your distressing story.
Super-important with any of this sort of thing is to document everything. Every phone call you make, the name and employee ID of everyone you talk with, what they said, etc. Keep a notebook and have 6-12 pages for each creditor, so you can keep all your notes in one place.
Finally you need to go back and find bank records to prove you paid the consolidation agency, then you might want to also consider suing the agency for the entire sum you paid them. In small claims court, they'd look criminally negligent and if you have good documentation, including proof that they never paid any of your creditors, I'd be surprised if you didn't win a judgment. You probably have a free legal assistance group in your community too: this would be a case they'd really be able to help you pursue, I imagine.
Good luck to you and your family. It's a scary situation, I'm sure, but it sounds like you're doing the honorable thing by trying to rectify the situation, contact you creditors and pay off your debts rather than let them just charge off.
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