The lawyer thinks it is unlikely that they will settle. He said I make too much to qualify for chapter 7 and owe too much for chapter 13. He didn't seem to think there was much hope with any of the three options.

Depending on the creditor, there are other options available which are more complex than is fair to discuss in a forum like this. Also, some people do fall into a middle ground between 7 and 13, but 11 is also an option, depending on your profile and circumstances. Sometimes a lawyer needs to be creative.

Your house and other assets can be seized though. You might do well to seek another opinion. Sometimes a lawyer can be 100% correct, but still not get the right answer, if that makes sense.

I neglected to mention - doing nothing is the worst option. Your judgment will accrue interest at 10%, or over $34,000 annually. It's essential that you work with an attorney who can help navigate this thorny path.