Three key issues to think about.

It’s no secret that a growing number of homeowners with “underwater” mortgages feel that staying put isn’t worth it. And the ranks of homeowners who owe more on their mortgage than their home is worth continue to swell further into the millions. This has sparked a sometimes heated debate on whether these “upside down” homeowners should “walk away” rather than continue making monthly payments.

While simply “mailing the keys back to the bank” may be tempting to those who fear their homes will never recoup the mortgage principal value, the decision is complicated. Ultimately, the choice comes down to understanding and weighing the likely consequences.

While each individual’s situation is unique, there are three basic issues to explore as a starting point: legal, financial and quality of counseling.

1. What are the possible legal consequences?

There may be a great deal of difference in how mortgage companies react to borrowers who walk away, depending upon the borrowers’ circumstances. Homeowners who can still afford to pay but choose not to may be sued for the remaining balance of the loan, possibly resulting in wage garnishment.

This may be less true for borrowers in dire straits. In the past, mortgage companies have usually not pursued those with few assets and little income after a foreclosure; however this should not be automatically assumed. Homeowners should consult tax and real estate attorneys about the laws in the relevant state.

2. What are the possible financial consequences?

Forgiven mortgage debt becomes taxable income. The Mortgage Forgiveness Debt Relief Act of 2007 may offer help, but navigating its provisions correctly requires legal expertise to ensure proper filing.

Credit rating damage is perhaps the most obvious financial result of walking away. Foreclosure impacts a credit rating for at least three years and possibly as long as 10 years, according to some experts.

For those who could not hope to pay their mortgage, credit rating damage is inevitable and could already be evident before foreclosure. But for those in relatively good financial shape, walking away could drastically impact expected lifestyle.

A bad credit history can mean being denied or paying more for products and services –- or losing a job opportunity. Credit reports are used routinely by potential employers, insurers, lenders, utilities and service providers (cellphone carriers, rental companies), among others.

Determining how much it would cost to rent is also part of the financial equation. Assuming bad credit would not preclude renting in a desirable location, is the amount saved by renting so much lower than the mortgage payment that it’s worth defaulting? Each individual must determine what the threshold amount should be.

3. How can homeowners tell reputable advisers from scammers?

For starters, homeowners can consult their own trusted legal and tax advisers for guidance. The US Department of Housing and Urban Development also provides a list of approved credit counselors in every state whose services are free. These counselors will also help determine eligibility for loan modification or refinancing under the Homeowner Affordability and Stability Plan (HASP) and help prepare documentation.

Fee for service companies are also abundant and their quality varies widely. The U.S. Department of Justice provides a list of vetted Credit Counseling Agencies made available through its U.S. Trustee’s office.

Be wary of companies promising quick and easy solutions. Often, they offer nothing homeowners couldn’t do themselves or that they are legally entitled to. Before you part with any cash, check into the company.

If you are tempted to walk away, be sure you understand the legal and financial ramifications and ensure you get advice from people you have good reason to trust.