Debt Settlement Created A Mess

We unfortunately were drowning in debt. I stress about this sort of stuff. We decided to use a debt settlement company. Things felt good for several months...but then the nightmare started. Apparently credit card companies are fed up with debt settlement companies. We started getting letters from lawyers telling us we needed to pay asap. We were warned that they would try to scare us, and they did. The debt settlement company was able to negotiate the debt in a smaller amount; HOWEVER, the lawyers want the money NOW. They don't fool with small payments...they want it all or forget the deal...they will see you in court.

My husband and I are not dead beats, we are just going through an extremely rough period right now, like a lot of people. Since we didn't like getting letters and phone calls from lawyers, we decided to take money out of an IRA to pay the debt off. Once it was paid, I felt so much better...UNITL TAX TIME. We usually get a refund every year EXCEPT this year, we have to pay state and federal taxes. We are trying so hard to get out of debt, yet we can't.

Someone mentioned that we should file a 982 form on our taxes. To me it sounds like the 982 form is for 1099s that are given due the settlement offers. Is there a way to use the 982 form for using having to take money out of an IRA due to the credit card companies wanting their money now?

Any advise you could give would be most appreciated.

Thanks