Council tax arrears, bankruptcy proceedings (please help)

[dbsdabson]

I am presently in arrears of £2057 council tax due to loss of job and business, I had spoken to the officials in charge and asked me to filled a form indicating how much I can afford. I offered £10 weekly payment pending when I can sort things out or find a job but the only letter I received from them was a bankruptcy proceeding letter against me which after reading indicating that they are taking over all my possessions once such judgement is passed by the court. My house is presently mortgaged and also in arrears but I am scared of losing everything and rendering me homeless. Please help. How can I deal with this issue.