Most of us here have come to this site because we have crashed into a wall of debt, commonly through no fault of our own or because we were not financially savvy.
There is no clear moral position as far as I can see, some say “you’ve had the money so you should pay it back” and some others characterise all the financial institutions and their more unpleasant hangers on (debt collection agencies) as spawns of the devil. The reality is, as always, somewhere in-between.
You have identified that your present problems are made worst by the amount you are paying to credit card companies and for your loan account. If that is stopping you from buying food for you and the kids then it is there where you need to begin making changes.
Now you need to determine which cause of action you intend to take. First you can consider the Consumer Credit Act, if your credit cards were taken out before 2007 then you can challenge the enforceability of the credit agreement, the Consumer Credit Act imposes strict criteria on the way an agreement is laid out and the wording and content of the agreement. If your agreement fails to comply with regulations (a surprising number fall short here) you can challenge the enforceability and, sometimes, not have to pay the debt back.
Another option is to ask the Credit Card Company to accept smaller payments and to freeze interest until such time as you return to a stronger financial footing this can work with the help of some organisations like the Citizens Advice Bureau or one of the national debt help organisations helping you. This is OK for some people but the financial institutions are not beyond reneging on their agreements, selling the debt on and plunging you into bother when you are not expecting it.
Another option is to just stop paying, this will lead to all sorts of letters and telephone calls, threats of home visits, notice of default, assignment of the debt to a debt collection company, the possibility of court action, threat of bailiffs and entries on your credit record. If you ignore all the threats and bluster in the final analysis all that happens is you go to court and a judge will determine a repayment schedule that will never be for more than you can afford and your credit rating will be damaged for a few years and, for some of us, not being allowed to go into debt again is a good thing.
There are also issues around what actually constitutes your debt, if you can determine that some of your debt is made up of unfair charges and the interest applied to those charges then you can reclaim that money. Also, if some of the debt is made up of payment protection insurance (PPI) then there is a chance that it might also be reclaimed.
What the majority of people who are members of this forum do is clarify their position by making a request for a copy of their credit agreement under the rules of the Consumer Credit Act (CCA) this cost a pound, or they make a Data Subject Access Request (SAR) this costs ten pounds but for that you are suppose to get all the data that an organisation holds on you.
Armed with this information you can then decide what route to take. Of course it can become more convoluted than that and nearly always does but the guys on here will help all that they can. If you have any questions just ask.