Continuing declines in the housing market in some parts of the country have left many homes still “underwater” across America. While these homes may not be physically floating in water, their owners no doubt feel like they are drowning in debt. One reader writes:

My first mortgage is paid.  I took out a line of credit on this house for $81,700 in 2007. I am 72 years old and retired.  I have since moved out of state.  I would like to sell this house, but the homes in this area are only selling for $40,000 – $45,000. I cannot afford to pay the difference. What are my choices?

I am sure you are well aware that you are not the only person in this situation! It’s unfortunately quite common. According to CoreLogic, just over 11 million homes — about one in five homes with a mortgage — are in negative equity, meaning mortgage balances are greater than the value of the home.

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Before we look at your options, there are a couple of things you need to think about here.

First, it’s important to realize that when you paid off your first mortgage, the lender that holds the home equity loan moved into first lien position. So even though this loan may have originally been taken out as a second mortgage, it is no longer a second mortgage. The reason that is important is that sometimes when a homeowner is underwater on both a first and second mortgage, the second lienholder is more willing to negotiate because it knows that in order to foreclose it has to pay off the first mortgage. That doesn’t sound like it’s the case here.

One thing you need to do before you can make a decision about this house is to meet with a tax advisor with experience in issues related to 1099-Cs. If you are able to get out from under this loan without paying the full balance, the IRS will consider any cancelled debt taxable income. You’ll owe taxes on it unless you can show that you qualify for an exception or exclusion, such as the insolvency exclusion, or the Mortgage Debt Forgiveness Relief Act (which is currently slated to expire at the end of 2012 unless Congress extends it). This is vitally important because you don’t want to end up in a situation where you owe the IRS a big tax bill you can’t pay.

[Related Article: A Slew of Tax Tips to Clean Up Your 1099-C Mess]

With that information in mind, you can consider:

A short sale. This is a sale of your home in which the lender allows you to sell the home for less than what you owe. If you are able to sell your home this way you want to get an attorney to look over the agreement to make sure you aren’t on the hook for any deficiency balance.

Walking away and letting the home go into foreclosure. This can be risky because the lender may decide to sue for any balance left after the home is eventually sold. But it is a popular option in some cases.

Filing for bankruptcy. This may allow you to put this home behind you and avoid taxes on any cancelled debt. An attorney can help you figure out the pros and cons of this approach.

[Learn More Here: Underwater On Your Home: Your Six Options]

You may have some tough decisions to make here, but getting advice from experienced professionals who are helping other homeowners in similar situations should help you decide which approach is right for you.

Consumers are now handling their credit card accounts more responsibly after going half a year with more troubling statistics coming out about their spending and repayment habits.

Instances of consumer credit card delinquency — defined as accounts that have gone 90 days or more without a payment — declined between the fourth quarter of 2011 and the first of 2012, according to the latest consumer credit statistics from  credit monitoring bureau TransUnion. Now, that rate stands at 0.73 percent of all accounts, down from 0.78 percent a quarter earlier.

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And at the same time, the amount of money being borrowed on those accounts also declined, the report said. At the end of the first quarter, the amount owed by consumers was $4,962 per person on average, down $242 from the total seen in the fourth quarter. Both the amount owed by the average consumer and the delinquency rate on these accounts had been rising since for the previous six months.

“After two consecutive quarters of increases in both the delinquency rate and average debt, it is encouraging to see a return to declines in delinquency,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “This contributed positively to a general trend since the bottom of the recession, which saw delinquency rates remain at near-record lows. Trends in average debt year over year suggest that little more than the usual seasonal influence is behind these changes.”

These improvements were seen even as credit card issuers continue to expand their efforts to lend to borrowers with subprime credit scores, the report said. The amount of new credit cards issued nationwide rose 20 percent in 2011 compared with 2010, driven by a 24.2 percent increase in lending to subprime borrowers, up from only 21.8 percent of all accounts given to these consumers the year before. That trend continued into the first quarter of this year, when subprime accounts made up 24.1 percent of new account origination.

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Consumers with subprime credit scores likely saw their ratings take a significant hit during the recent recession, but the improving economy has buoyed credit quality nationwide and helped to repair many consumers’ personal finances as well. Lenders, recognizing this trend, have once again broadened credit standards for new accounts.

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To err is human and to forgive is divine, but some consumers find it harder to be godly when it comes to their money.

The Temkin Group, a business that consults on and researches customer experiences, has done a new survey of 10,000 consumers to determine which businesses customers are most and least likely to forgive. The 2012 Temkin Forgiveness Ratings shows a mixed bag for banks and credit unions.

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While USAA, a bank that works with military members and their families, took the top spot as the business that participants would be most likely to forgive, other financial services companies didn’t fare as well. In fact, when looking at industry averages across the study, credit card companies had the lowest forgiveness rating out of 18 industries while grocery chains and retailers had the highest.

However, consumers as a whole are more forgiving than they were last year, when Temkin conducted the Forgiveness Ratings for the first time. Banks, investment firms and credit card issuers all saw a double-digit jump in their industry forgiveness rating from 2011 to 2012.

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So what has caused this increase in consumer kindness? The Temkin Group didn’t offer much in the way of analysis of these numbers, but it could be that time heals all wounds and the more distance consumers get from the Great Recession, the more forgiving they will become of the financial institutions that were blamed for the meltdown.

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These days, there are significant consumer protections in place for Americans, but at least one segment of the population might have a little trouble as a result of the increased safeguards against predatory or misleading lending practices.

One of the provisions of the Credit Card Accountability, Responsibility and Disclosure Act required lenders to consider individuals’ income when they apply for a credit card so as to ensure they can afford their payments, but this has been problematic for many stay-at-home parents, according to a report from CNNMoney. Stay-at-home parents who rely on their partner’s income to cover their expenses might have need of a credit card in their own name, but will be denied unless they can prove to lenders that they have their own source of income.

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Experts have noted that one way around this problem is for stay-at-home parents to open a card with their partner’s name on it as well, but this can be concerning for a different reason. For instance, if the couple were to separate or divorce, having both partners being co-signers on the same account can create friction and even financial problems, regardless of the intentions with which they entered into the agreement.

Further, for those who stay at home to raise their kids, not having a credit card in their own name can be problematic because it might adversely affect their credit standing.

As a result of these problems, there has been some amount of pushback from stay-at-home parents, who are now campaigning and petitioning federal agencies to change the rules so that those who do not have their own income might, under special circumstances, be able to get credit cards in their own name, the report said. Already, the federal Consumer Financial Protection Bureau, which oversees the lending industry and is in charge of enforcing the Credit CARD Act, says it is examining the way the current rules affect stay-at-home parents.

“We recognize that stay-at-home spouses have significant financial responsibilities and play an important role in the U.S. economy,” CFPB spokeswoman Jen Howard told the news agency.

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Overall, these federal protections have been a boon to consumers, but the CFPB has proposed a number of changes and new rules that will better serve Americans in how they deal with their finances going forward.

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When it gained full regulatory power over the financial services industry last year, the federal agency tasked with protecting consumers from predatory or misleading lending practices has as its primary goal the creation of simpler lending agreements that were easier to understand.

However, in the intervening months, there has been little in the way of action toward that goal. Now, though, one of the federal Consumer Financial Protection Bureau’s top officials says that the need for a uniform, simplified lending disclosure for credit card agreements is still very much on the agency’s mind, according to a report from Dow Jones Newswires.

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Speaking at a conference for the payments industry, Marla Blow, assistant director of card markets for the CFPB, stated that it’s her belief that consumers should be able to easily read and understand the terms of any lending agreement into which they enter, and that a document should be created by the agency to make that possible, the report said. The goal for such a document is that it would be more legible and understandable, while still providing legal protections and making sure the issuing industry’s concerns for disclosure forms are addressed.

Already, there has been some worry voiced by lenders that the CFPB’s trial document — currently being tested for credit card applications to the Pentagon Federal Credit Union — does not include crucial legal language that spells out the legal responsibilities between lender and consumer, the report said. The concern is that this could lead to a larger number of lawsuits over balance disputes. Currently, these complaints are the most frequently lodged by consumers with the federal agency.

However, the CFPB says that these billing disputes are largely the result of consumers not having a full understanding of their lending agreement, and that simplified disclosure forms will help them to avoid these issues in the future, the report said. Consumers also frequently complain about the interest rates on the cards they acquire, and this, too, would be included and explained in the CFPB’s ideal disclosure document.

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The CFPB has had full regulatory power since last July, but only gained its top executive earlier this year. Since that point, however, it has been far more aggressive in rolling out consumer protections for a number of financial accounts.