A reader owes nearly $100,000 but takes home $850 a month.

Question: I have a rather severe situation. I owe $61,000 in private student loans and another $30,000 in federal loans. I also have a child support obligation to the tune of $600 a month for my children who I haven’t seen in years.

I only make $14.25 an hour. After all is said and done, I only bring home $850 a month net.

My problem is that the private student loan company wants their money, about $670 a month. I’ve tried speaking to them, and the best they offer is $100 a month for 6 months at most. I’ve used up all the forbearance allowed.

I barely scrape buy as it is. A second job isn’t really an option, as my first job has such long and weird hours. What in the world can I do? I have no savings, no emergency fund, and at this time, little to no hope.   Help me?

— Owen in Colorado

Steve Rhode answers…

These are certainly trying times for you. The stress, pressure, and emotional toll must be immense. You’re probably feeling trapped, pulled, and hopeless. Those are all normal feelings in this type of situation.

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On the federal student loans, you absolutely need to consider one of the income-driven repayment plans. That will probably result in a $0 per month or a very low payment, yet keep you out of default. These income driven repayment plans are not perfect but they are the best option in your situation. You might want to read this explanation to understand the pitfalls.

On the private loans, you have a few options. You can either make the contractual payment, (which you clearly can’t afford), you can send something (but that would be pointless), or you can strategically default.

Defaulting on your private loans has significant consequences. It will increase your balances. You may be threatened with — or actually experience — legal action. But at its core, this is just a math problem, and unless the private student loan lenders are willing to work with you, then the math makes no sense.

You will eventually default, so why not approach this with a plan and prepare for it? That would be the logically smart thing to do.

You should read Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan to better understand why defaulting with a plan can make sense.

With the right people advising you, defaulting can often result in good conclusions — like settling the debt for less than you owe, reduced repayment plans, nearly zero-percent interest, and the elimination of collection pressure.

Of course, there’s a chance your private student loans could be eligible for discharge under bankruptcy. Read These Private Student Loans Can Be Easily Discharged in Bankruptcy.

You’re currently feeling hopeless, but I see your situation as hopeful. A solution can be planned and executed. If you want to get someone to help you see through the fog and work with you to develop a plan of action to tackle this situation, I’d strongly suggest contacting debt coach Damon Day. He’s uniquely brilliant and skilled at dealing with the issues. We discuss such situations on a daily basis.

You can also see my list of smart student loan attorneys who may be able to assist as well. A good expert will help you develop a plan. Don’t give up, Owen, brighter days are ahead.

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Email your question to editor@debt.com and Howard Dvorkin or one of his fellow experts will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Meet the Author

Steve Rhode

Steve Rhode

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Rhode has been writing since founding a nonprofit in 1994 to help people get out of debt.

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Article last modified on December 4, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: What Happens If I Can’t Afford My Student Loan Payments? - AMP.