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Study: Growing number paying credit cards before mortgage

Throughout the recent economic crisis many Ohioans have faced the daunting task of deciding which bills to pay each month. Historically, Americans have chosen to pay the mortgage before other debts, such as unsecured credit. A Cincinnati bankruptcy attorney can tell you that unsecured credit includes credit cards.

A recent study suggests that Americans are choosing to pay the credit cards bills before servicing the mortgage. Some experts believe the new trend arises out of the nature of the current economic crisis. As individuals struggle to put food on the table, the credit card has become a staple. Experts say more and more Americans are deciding to pay the credit cards for the short term ability to re-tap revolving credit to keep food on the table and the utilities in service, letting the mortgage fall into arrears.

The trend in families giving credit card debts priority over home mortgages seems to be more pronounced among homeowners associated with a sub-prime mortgage. Recently this blog reported that 28 percent of American homes are now underwater.

It is less clear if the current trend of paying credit card debt ahead of the mortgage has to do with the housing market. Some homeowners or condo owners, however, apparently look at the degree to which their real property has fallen in value.

TransUnion says 30.4 percent of subprime mortgage households fell behind on the mortgage without making any late credit card payments last year. Only 12.3 percent of subprime households were late on the credit cards while remaining current on the mortgage. Not all underwater mortgages are the result of sub-prime loans.

While there is a growing trend in servicing unsecured debt and car loans -often a secured debt-the National Foundation of credit Counselors say that 91 percent of consumers continue to see paying the mortgage as the number one priority.

Losing a home to foreclosure can be both emotional and a source of financial distress into the future. Southwest Ohio residents who are struggling under a high debt load may seek information from a seasoned chapter 7 and chapter 13 bankruptcy attorney for information on how the bankruptcy process can provide debtors a fresh start in an individual financial situation.

Source: Washington Post, "Growing number of consumers pat credit card debt before mortgage," Ylan Q. Mui and Dina ElBoghdady 13 May 2011

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