A person can help pay his monthly bills and avoid over-extension by going into foreclosure, doing a short sale or considering bankruptcy.

Q: I will try to make a long story short. I have credit card debt of about $12,000, a car loan of $20,000 and a ton of mortgage loans.

I owe $156,000 on my primary residence, but thanks to the Great Recession, my house is only worth about $100,000, according to comparable sales. I own a second house, and I owe $64,000 on the first mortgage and $9,881 on the second mortgage. That property is worth about $30,000 and needs about $30,000 in repairs. My stepdad is living in the house and just pays the mortgage amount each month.

I make a decent amount of money on paper, about $70,000 per year, but I only bring home about $2,500 per month after taxes and other deductions. Here’s the problem: My monthly bills are $2,057, and that doesn’t include our energy bills, food, gas for the car, and stuff for me and my 13-year old daughter (I’m a single dad with primary custody).

I refinanced my primary home loan about a year and a half ago to a 5/1 adjustable rate mortgage (ARM) through FHA to save something on the payments each month, but that doesn’t seem to be helping.

I wanted to see if you think there is any way for me to make it on the money I am earning or if you think I need to start over. It doesn’t matter to me if I lose either house. I was thinking of getting a small one or just renting. I’m just not sure where to start. Thanks for your help.

A: It’s clear that you’ve way over-extended yourself on mortgages because while you’re making good money, you’re spending about 80 percent of it paying mortgages, taxes and insurance. That number should be well below 50 percent of your take-home pay and ideally only 36 percent of your gross annual pay.

But your take-home pay looks a little low. Are you withholding too much? Has the company made some sort of error in calculating your pay or are you putting money away into a retirement account?

For the kind of income you’re earning, your take home pay should be in the neighborhood of $4,000+ per month, not $2,500. That extra $1,500 would really come in handy since you’re trying to live on about $400 to $500 per month. You should go to the human resources department and check your withholdings.

If there is an error, it could be that it has been in place for a while and you’re owed some catch-up cash. We’re hoping that’s the case.

Still, let’s assume for the moment that your paycheck is correct. Your debt load is way too high for a paycheck that totals $2,500 per month. You do have some options. You could let one or both of the properties go into foreclosure, also known as a strategic default. You could do a deed-in-lieu of foreclosure. Or, you could do a short sale to get rid of the properties.

Of all of these, the short sale (where you sell your home for less than you owe to the bank) will look the best on your credit history, though that will be a pretty big negative for a few years. And, it can take a while to do a short sale, since the bank has to approve the paperwork – well, in your case two banks (the first lender and second lender), which can take even more time.

Going into foreclosure or doing a deed-in-lieu of foreclosure would have a bigger impact to your credit history and score. Your monthly cash flow situation would improve, but you’d be making a difficult decision in walking away from your obligations. You should speak with a real estate attorney who can walk you through your different options, and help you with the paperwork. You want to make sure the debts from all lenders are discharged completely, so there is no chance your lenders can chase you for this debt years from now.

A final option is bankruptcy. But before you go down that route, I’d rather see you explore all of these other options. You may want to talk to a credit counselor at a nonprofit credit counseling agency, like Credability.com or someone from the National Foundation for Consumer Credit (NFCC.org). Budgeting assistance should be free. Debt management programs should be extremely low-cost.

As a single dad, all of this plus the challenge of raising your child falls on your shoulders, and it’s a lot to handle. If losing both of the houses isn’t a problem, and your daughter understands that she is going to make a new home with you somewhere else, then that may be the best solution. While moving isn’t easy, it’s a lot easier than trying to shuffle bills around each month, deciding which one you’re going to pay.

But do check into why your take-home pay seems so low. Maybe there has been a mistake that will help significantly. And, let us know what happens.