In the past couple of years, more Americans in a financial bind due to lack of income have made the choice to prioritize credit card payments over mortgage payments. With the close of 2009 statistics illustrated that twice as many debtors were delinquent when it came to paying their mortgage while paying credit card payments rather than paying their mortgages off first and then credit card bills.

Much of this new trend can be written off to the credit crunch and lower balances on cards in general, but it’s even more probable for people that are watching the real estate market erode to lose faith in the value in their homes and simply give up. For a number of homeowners, walking away from their houses with mortgages that they just cannot afford seems like the only decision to make.

A common reason that most homeowners give for walking out on mortgage payments is that the only punishment is a bad credit score, which seems inevitable in this economy anyway, which leaves them little reason to keep paying mortgage while not building equity. Although Americans like to take pride in the fact that we are a “civilized and industrial” country, many Americans struggle to obtain the bare necessities: food, water and shelter.

In times of need, when there is no cash on hand to feed families, credit cards become the typical financing strategy. Understandably, there is a set of reasoning that comes with prioritizing the bills this way. If a credit card is taken away, a person loses the opportunity to ensure that they will have food to eat and clean water to drink and bathe in, heat in the winter, or a car to take them to work and back.

Still, experts urge Americans in this situation to try their hardest to place their mortgage higher on their priority list. A mortgage is a secured debt, which means that the bank that holds your mortgage has the authority to take it away if you do not pay because your house is collateral. Even still, some people have no problem leaving a house whose value has decreased dramatically, choosing to rent instead. But in a situation like this, playing the waiting game might be the best choice. Eventually the real estate market will come around, and it will pay to own a home at that time.

Mallory works for Rapid Recovery Solution and writes articles on commercial collection agencies This article, More Americans Forced Into Making The Decision Between Bare Necessities And Shelter is released under a creative commons attribution licence.

Student loan debt is perhaps the most grueling, tiresome kind of debt that you can owe. For you to go to school, Uncle Sam has doled out money, and he fully expects to get that money back. Unlike most other loans, federal student loans are extremely difficult to discharge in bankruptcy. A man that drove to Vegas and gambled himself into foreclosure has a much more realistic chance of being capable of walking away from the situation than a student who borrowed money to go to school. Also, federal student loans have no statute of limitations and can be collected even from debtors’ Social Security Payments after they retire.

So what do you do if you are a student fresh out of school struggling to make ends meet? Get educated, again. A Collections manual, 2009 PCA Practices, was temporarily posted in a public section of the Department of Education’s website. A guide for the private collection agencies that work with the Department of Education, this manual can prove to be an invaluable resource for former students who are trying to learn more about paying back their student loan.

This article is based on what I’ve learned from the manual, and it focuses on the circumstances under which collection activity might be suspended on a student loan account. It also goes into how you would go about ceasing collection activity on your student loan if you really wanted to. According to the manual, collection agencies must immediately suspend collection activity on an account if the borrower disputes the amount that is being owed, for example, claiming that the debt was paid off, was never owed, or should have been canceled.

Collection activity should immediately be suspended if the borrower raises a legal defense against repayment. These might include a closed school, an ability to benefit, or circumstances under which the Department of Education might not be allowed to pursue collection. If the borrower receives a 65 Day Notice of Federal Offset, or 30 day Administrative Wage Garnishment notice, and requests a written review or hearing in response, the collection agency needs to suspend collection activity. Finally, if the borrower files a written or verbal complaint against the collection agency, collection activity must be suspended.

Unlike suspension of collection activity, which is temporary, ceasing collection activity is permanent. If you want your student loan debt collector to stop contacting you, you must request in writing that the collection agency stop all communications with you. In these cases the collection agency is allowed to contact you one final time to let you know how they plan to proceed. Keep in mind that requesting that collection activity on your student loan be stopped is not a very good idea, as after the section on ceasing collection activity comes a section that informs the collection agency that the Department of Education expects the collection agency to evaluate the accounts with these requests for litigation. So even though you may experience a period of peace, that one final phone call you receive very well might be to inform you that you are being sued for all of the money you owe.

Mallory Megan works for Rapid Recovery Solution and writes articles on credit collection agencies. Unique version for reprint here: Directly From The Department Of Ed’s Manual- Suspending And Stopping Student Loan Collection Activities.

On February 22nd, 2010, the Credit Card Accountability, Responsibility and Disclosure (CARD) Act took effect. The CARD Act had one major goal in mind: to try to put a leash on credit card practices and impose limits to the fees that credit card companies charge consumers. It was designed with credit card holders in mind, limiting the amount of credit made available to them in this recession “for their own good.”

Due to the life changing CARD Act, a number of financial institutions have modified their business models by reducing potential risk to cardholders. They have dropped or restricted some borrowers with a poor financial history, tightened up credit lines, and are marketing less. Analysts predict credit limit reductions to have two main impacts for the collection industry.

One impact of the CARD Act has been the restriction of the average size of accounts that are placed for collection. This, coupled with consumer behavior these past few years, where people in general spent savings and maxed out personal loans and home equity, raises concern and eyebrows, because for many debtors, credit cards are the only short term credit that is available to them at this moment.

Another major impact of the CARD Act is a result of the provision that consumers are not able to pay off one credit card debt using another card. While this may help consumers to be more fiscally responsible, this obviously has massive ramifications for the collection industry. Researchers and leaders in the field hypothesize that the best way to deal with the enormous changes that have ensued is to remain flexible and to be creative. In addition to the same old telephone calls and collections letters, the internet can be looked into as an option for payment.

Researchers also remind us of a few ideas that we, as collection professionals should remember about the CARD Act. Excess payments should now go to pay off the accounts with highest interest balances first. The CARD Act also gives consumers the capacity to set their own credit limits that might be less than those set by the creditors, and marketing credit to college students and giving credit card access to people under twenty one will now be severely restricted.

Mallory Megan works for Rapid Recovery Solution and writes articles on medical collection agencies. This article, What Every Collection Agency Should Know About The CARD Act has free reprint rights.