Puerto Rico is struggling with a massive debt crisis of $72 billion that it can't pay back.

The territory is running out of money. Its economy is shrinking. Nearly half of its residents are living at or below the poverty level while unemployment is more than double what it is on the mainland. As a result, thousands of residents have fled the island and moved north to look for work and a better life.

Then this week, for the second time in less than a year, Puerto Rico defaulted on millions of dollars in payments, placing the island in an even more precarious economic state. If the island is forced to contend with lawsuits filed by creditors, then "every dollar used to pay lawyers will be a dollar…not available to pay creditors," Governor Alejandro García Padilla told CNBC on Monday. 

This week on Money Talking, Charlie Herman talks with Allison Schrager from Quartz and Peter Coy from Bloomberg Businessweek about the high cost of Puerto Rico's debt and what the solutions being proposed could mean for states facing similar financial crises.