Dear Debt Adviser,
What is worse — having your home go into foreclosure or allowing your credit cards to default?
— Sylvia

Dear Sylvia,
This used to be an easy question to answer. “Pay your mortgage first” was always the mantra of financial advisers. And it’s still true — if you can afford your home.

Unfortunately, the subprime crisis has revealed that many people are in houses they simply cannot afford to keep.

Can you afford your home? Answer this question before you do anything else. Contact a credit counselor (you can find one at www.moneymanagement.org, www.debtadvice.org or www.aiccca.org) who can help you put together a spending plan. This plan will show you what money is coming into your household and where it is going.

If you don’t have a spending plan already, you are missing opportunities to redirect at least part of your income.

If a credit counselor helps you determine that your living expenses are larger than income, you will need to make adjustments. Try cutting some expenses or adding extra income from a second job or overtime.

If you still can’t break even, you have decisions to make. The counselor can help you determine which course of action is right for you: ditching the credit card bills or taking the even bigger step of downsizing housing.

If you can’t afford the house, I suggest contacting a counselor certified by the Department of Housing and Urban Development, or HUD (you can find one at www.hud.gov), for your options. This is best done before any missed mortgage payments, as there are fewer options available as you get further behind on payments.

Your options are different if you can afford the house but not the credit card bills. A credit counselor can discuss whether you’d be better off with a repayment plan of your own, a debt management plan through an agency or a bankruptcy.

Keep your eye on what really matters. Somewhere along the line, a well-meaning friend or a collector will raise the “but this will ruin your credit” argument. Don’t focus on credit impact.

Rather, work on a dollars-and-cents solution that will work over the long term. Otherwise, you will go crazy with unnecessary worry and fall prey to every bill collector who only wants the bill paid and threatens you with credit Armageddon.

Bad credit is a temporary situation that disappears over time if you treat the source of the problems rather than the symptoms. Your credit and credit score mirror your financial situation. The sooner you solve the problem, the sooner your credit will reflect a new, solid financial position.

Whichever option you choose will involve challenges. Getting out of a home you can’t afford involves trying to get a lender to work with you to solve the problem. A housing counselor can be a good guide to maximize your chances of working out a plan to keep or gracefully exit your home.

For more help, contact the HUD people or Neighbor Works. Or contact your state housing finance authority for a referral to a local group that may help.

If you decide to keep the house and not pay the credit card bills, expect a rising storm of phone calls from collectors with possible legal action as an end result. If you can’t afford to pay those credit card bills, see a lawyer soon to determine your legal options.

The Debt Adviser, Steve Bucci, is the president of Money Management International Financial Education Foundation and the author of “Credit Repair Kit for Dummies.” Visit MMI for additional debt advice or to ask a question of the Debt Adviser go to the “Ask the Experts” page and select “debt” as the topic.