Legal Question in Credit and Debt Law in Texas

I am in need of some serious legal/financial advice and don't know where else to turn. At this point in time, I can't afford to hire an attorney so I'm really hoping someone here can help me out. I am to the point of nauseous and losing sleep over this issue.

Over a period of a few years, I borrowed approximately $8K from a friend. I repaid him partially. About a year ago, he and I had a falling out and he demanded I repay him the rest of the money. I agreed that I did owe him, and that I would repay it. He didn't want to take payments but eventually agreed to pay $350/month - then my husband took a major paycut, and we could not afford to make the payments. We did sign a promissory note at that time and then failed to make payments. I tried contacting his attorney several times to re-start the payments, but never got a response.

He also threatened to contact my employer, file criminal charges against me, and cause me to lose my job if I didn't repay him in a timely fashion.

Today I get a certified letter from him demanding that we repay the full sum and that he will no longer accept incremental payments, as he feels he has been more than fair, or he will take us to court and sue us for the balance.

There is no way we can repay the balance in the timeframe he has demanded (approximately a week & a half). I am also very afraid of going to court or being sued and having my husband get involved in this mess when the debt is entirely mine. He has told some of our mutual friends that he hopes I ignore the letter so he can take me to court and "make the b***h suffer."

I am willing to repay this and can make payments beginning in March - but frankly, there is just no possible way I can repay in full. We cannot get a loan from anywhere else to repay him, and we don't have those kinds of funds available. I honestly couldn't even put down like 1/4 of what we owe as a down payment. I need at least 18-24 months to repay the balance. I can easily document our bills and income to back this up. We really don't spend extravagantly - we live in a modest 50-year old ranch house, don't drive brand new cars.

Do I have ANY recourse? Is there any way I can reply to his letter with something legal and beg him one more time to accept payments? Or am I stuck with being sued because I can't pay in full?

I really need input from a lawyer on a letter to reply to him. I want to pay $600/month beginning March 15, which would put the loan being paid off in 12 months. I am willing to even set it up as an auto wire transfer or something so it is pretty much guaranteed to him. I just need help convincing him to give us another chance. I'm sure he has a case against me because we did sign the note before we stopped payments, and I know he has records of my emails agreeing on the amount owed, and records of his checks to me. I am concerned he won't accept the payments if I ask him, so I'm really hoping an attorney could help me write something up that would be more convincing. I know that in Texas, debtors are favored other creditors in court, and I know court will be costly and time consuming for him, and even IF he were to get a judgment, again Texas really favors debtors and it would be very tough for him to collect. We do not own anything other than our home and cars (which it appears would be exempt under Texas law), and Texas doesn't allow wage garnishment for unsecured debt. I also know that even if he does go to court - the judge will probably just set up a payment plan anyway. I want him to understand that by us paying monthly, it would be much easier for HIM, and ask him to give me one more shot at paying this off.

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