Debt Adviser: How can I lower my student loan payment?

Dear Debt Adviser,

I currently have around $30,000 in student loans. I am overwhelmed by this debt and have avoided making payments for quite some time. I get seven bills every month asking me to pay more than I make. My credit score is ruined. How can I fix this situation? Is there any way to consolidate student loans and lower the payments?

-- Jerry

Dear Jerry,

Ignoring your student loan debt is only making your bad situation worse. Now is the time to get those bills paid. And don't blame the loans for the damage to your credit score. It's damaged because you didn't make any payments. It's damaged because you didn't ask for a deferment.

Bankruptcy may not help. Current bankruptcy laws do not allow discharge of student loans except in rare cases. To discharge the loans, you must prove three things.

-- You have made a good-faith effort to repay your debt by trying to find a job and earning as much as you can.

-- You have minimized expenses. You'd need to show that you've trimmed all the fat off your budget, allowing only for a "minimal" standard of living, such as basics for food, shelter and health insurance, and some inexpensive recreation.

-- Making payments will cause "undue hardship." You don't get to define that term, by the way. You'd need to prove that there is "certain hopelessness" in your financial future for the term of repayment. You could discuss the possibility of whether or not your circumstances would meet those standards with a bankruptcy attorney, but I wouldn't count on that slim prospect. Unless you can prove you have no hope of securing higher-paying employment in the next 20 years or so, you would likely be denied.

More than likely, you'll have to work out a way to pay your student loans. So get started as soon as possible. Unfortunately, your options are more limited once your loans have entered default status. For federal loans, you can research your options at the U.S. Department of Education's Office of Federal Student Aid. It's unlikely you will qualify for deferment if you're employed. But you may qualify for a reduced income-based repayment plan if you are earning less than expected for your given degree.

For private loans, you will need to communicate directly with your loan provider to determine what options you may have for repayment. Many private student loan lenders are reluctant to work with people who are having trouble making payments, but it is worth a try.

It sounds as if you do not have enough income to repay what you owe on your loans at the current monthly payments. You may lower your monthly payment with some of the repayment options available, but the bottom line is you will need to increase your income or decrease your expenses. You probably need to do both. One way to accomplish this is to get a roommate. You might also consider a second job. None of the solutions to paying your student loans will be fun, of course, but the loans aren't going away. So start now and stop ignoring the problem.

Good luck!

(Steve Bucci is a personal finance coach and co-author of "Credit Repair Kit for Dummies." Email debtadviser@bankrate.com. For more Debt Adviser columns, go to bankrate.com. )