I'll call him Jim. Jim's situation is that he is running out of cash. He has a negative amortization mortgage. So the more payments he makes, the more he owes on his mortgage. And his house is worth less than he owes.

Jim is looking to do a mortgage short sale. That means his lender will agree that Jim sells his house for less than the mortgage loan. And the lender will get the loan proceeds and release the mortgage on the house. The lender will take a financial loss but it is better for them to get most of their mortgage paid off instead of getting the house back.

So Jim's question to me is, "Richard, should I stop making my mortgage payments?"

Here is my answer in this case. I have a lot of clients who have purchased my Mortgage Relief Formula or my coaching services on how to get out of debt. And sometimes they have several properties that are "under water" where they are paying an enormous payment they cannot afford. They may be digging into lines of credit to pay their mortgage payments.

People used to have savings and they would tap into their savings to deal with emergencies.

Today, most folks don't have savings and many tap into credit cards and equity lines instead of savings.

I'm not passing judgment on this. I think the economy makes it tough to make a living after paying all the usual expenses of life. A lot of folks speculated in the Great Game of real estate, or else they simply bought with little down payment, or they refinanced and have no equity and now with house prices falling, they have negative equity.

So should you stop making your mortgage payments?

I would never tell anyone to not make their mortgage payments. I can tell you that personally, I do not want to run out of cash. If I have no cash I am on the street. I would pay myself first and then pay for food on the table, and the light bill, the water bill, that type of thing. The essentials. And the mortgage payment would be after that.

Yes, your credit will show lates for every thirty day period you are late. This is a derogatory mark on your credit. Sure, that is true. But better to have a derog than run out of cash and not know where to turn.

Everything is negotiable. There may be things you can do to avoid having too many derogs. The lenders can retract their lates. They can change them to unrated. And even so, a "paid - settled" report is better than a "foreclosure" report or a "bankruptcy" report on your credit.

This is a difficult question to answer but I think answering it personally, survival always comes first. Please consult a good attorney and research things before making any decision about paying or not paying an obligation. I hopethis has been somewhat helpful.

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