Q. We have two mortgages, an adjustable-rate loan of $600,000 with an interest rate of 6.875% and a home equity loan of $110,000 at 7%. The first reset was in November and the next reset is this year. We want to keep our home, but refinancing is not a good option because our home value has dropped to the mid-to-high-$600,000s. Interest rates recently have been higher than our current rates. In November, our rates could adjust to 8.75% and it would be very hard for us to keep our home. What should we do?

A. Youâ??re in a very tough situation.

You owe more than your home is worth, and that's what's called being "upside-down." You can't sell or refinance without coming up with the cash to make up the difference, and for most homeowners in your position, thatâ??s just not possible.

Help might be available if you're lucky enough to live in a state with a special program to help distressed homeowners -- and you're surely one of them. Here's a summary of the 12 state foreclosure prevention programs.

You also may have a chance at a short sale. That's where your lender agrees to let you sell the house for as much as you can get for it. All of the money would be turned over to the bank or mortgage company, which would forgive the difference between the sale price and what you owe.

But to do that, both loans likely would have to be from the same lender. If your home equity loan is from a different bank or mortgage company, it will only get what's left after the primary mortgage is paid. That often means that company would shoulder all of the loss, making it unwilling to accept such a deal. And if the holders of both mortgages don't agree to a short sale, it can't be done.

We recommend that you consult with a member of the National Foundation for Credit Counseling, the nation's biggest and oldest credit-counseling organization. Its 120 member agencies abide by a set of professional and ethical standards that has served many individuals and families well for 50 years. The fees will be modest. Many NFCC members charge nothing to review your finances and less than $100 to establish a debt repayment plan.

Negotiating with your lenders will require professional help, and their counselors may be able to offer other solutions based on your specific situation. You can find a member near you online or call 1-800-388-2227 to speak with a counselor.

If nothing works out, it's time to take a realistic look at your situation and plan for a graceful exit. By that we mean: Stop paying your mortgage and line up a new place to live before your lender forecloses.

While that is a painful alternative, it might be the only one open to you. We urge you not to raid your retirement funds (401K or IRA accounts) just to make a few more payments on a house you cannot afford.

If you have credit card debt and the mortgage company reports that you are behind on your home loan, the credit card company will declare you to be a higher credit risk and throw you into universal default.

That means it can raise your interest rate to anywhere between 28% and 33%. So it's wise to use some of the money you would have paid on your mortgage to pay down your credit card debt. (In fact, given the problems you're facing, it's wise to start paying down as much of your credit card debt as you can right now.)

You also are going to have to find a new house or apartment to rent, so you will have to set aside money for the first and last month's rent, a security deposit and a pet deposit, if you have a dog or cat. And then there will be moving costs and, possibly, deposits on utilities. Don't wait until your credit is ruined and your money is gone to start thinking about these matters.

Plan ahead and execute. It's the only way to make the best of a terrible situation.