The answer might surprise you.
New studies show that the fiscal downturn has gotten so bad that consumers are now choosing to pay off credit card debt before making their mortgage payment.
A report by the Fair Isaac Corporation -- the entity responsible for the credit scoring system -- shows that consumers with upper echelon credit scores between 760 and 786 were twice as likely to default on mortgage payments as they were credit card debt. Those results are further supported by credit bureau TransUnion, which reports that nearly 7 percent of borrowers have defaulted on their mortgage, but have stayed current on their credit cards.
With nearly one in four Americans owing more on their home than it's currently worth, homeowners are clearly struggling.
"It's really an amazing trend," says Bill Sherwood, vice-president of the Austin, Texas-based credit counseling company, eCreditAdvisor. "If you have a home that's worth less than what you paid for it, your thought path would be 'Why am I putting $2,000 to stay in this home when I'm not gaining anything?' Where is the American dream in that?"
"People are in survival mode," explains Sherwood. "Two or three years ago, people could borrow 125 percent of their home value through home equity. People were using their [equity] lines to pay their mortgage and now that those funds have dried up and job loss has increased, it's a complete 180. They have no choice but to hang on to their cards."
The silver lining, adds Sherwood, is that those that find themselves having to choose which debt to fulfill may have more bargaining power now than they ever did in a robust economy. With lenders desperate to keep loans out of default, borrowers have more options when it comes to negotiation.
"When consumers are faced with survival issues, call your bank and say 'We can no longer afford to live here,'" advises Sherwood. "Call your bank, talk to the lender, talk to the people in the foreclosure department and see if you can get some forbearance. We've seen some banks come down from interest rates in the high 20's to the single digits. There are a lot of things they'll do now that they never would have done in the past."
After all, the worst thing from their point of view would be for you to just walk away.