I think you have it mixed up. I would continue to pay your credit card payments and not pay the 1st and 2nd mortgages. If your doing a bankruptcy your going to end up messing up your credit either way. You can end up living in your place for 10-14 months for free from the first month that you miss your payments. The short sale takes a long time to get approved. I would not pay the mortgage payments and save that money. I would continue to pay your credit cards with the minimal payment cause it helps to maintain your credit.

I'm going thru the same thing. I'll give you my situation.
Bought a house for $385k. 2 mortgage companies- 1st) $307k 2) 77k. and 3) 9k credit card debt. I am closing on the property this week. They both accepted the sale of the property for $245k. Don't worry about who gets what, your realtor will help you with all that. I continue to pay my credit cards cause later i can say i was going thru a hardship and was unable to pay a high mortgage payment but maintained my credit card obligation. Also don't pay the taxes, hoa's, etc. The bank will pay all this when you close on the short sale.

I lived in my house for 13 months for FREE! Didnt' pay either mortgages. The banks make up on there money cause they all have insurance. Don't worry about them. Take your offer for $219 and go thru the process and live in your home for FREE. You could probably use that money to pay off your credit card debt.

Did you chose a Realtor who is familiar with processing short sales? Usually a Realtor can negotiate this and other times an attorney will negotiate this. I am not sure what is the case in your situation as you are working with an attorney. If your realtor does not have experience with short sales ask them to visit http://www.cdpe.com here they can get short sale training if they chose. I did the training and even though I have close to 2 years working short sales, I still learned a lot.

Back to your house: the whole definition of a short sale is selling your house for less than what you owe, The amount that each lender receives to settle the mortgage debt is negotiated. Usually second lenders want at least 10% of the lien so in your case the 2nd lender may want $5,300. Now each situation and each lender is diffferent so I cannot tell you with certaintly this is what they will want but I have seen that this is the norm.The problem usually occur because first lenders want to pay the 2nd lender less money. In these situations often times your short sale negotiator (realtor or attorney)can try to get the 2nd to come down in what they want or try to get the 1st to come up in what they are paying. Either way there are many options to make this work. If all else fails the buyer can come in with money for the second, you can provide money to the 2nd, or the realtors can give up a portion of their commission to the 2nd.

Remember even though the first is not going to be paid off all of the way they will still be better off doing a short sale. The same with the 2nd lender because they will not get anything should your house go to foreclosure. Also unlike the name may suggest, there is nothing "short:" about a short sale. It sounds like you are at the very beginning of the negotiation process which could take 1-4 months. Make sure your Realtor secures the buyer that you chose to go with and keeps in touch during negotiations. Also, if the house is worth more than $219,000 k perhaps you can counter offer to see which buyer would be willing to come up a bit in price to allow for more $ for both lenders. I hope this helps and good luck.

Most successful Short Sales involve 2 different lenders. I'm not sure why yours would be any different.....

Gene

Many short sales have more than one lien. In a short sale the first gets paid off first and then the second and so on if anything is left. Most of the time there isn't enough to cover the total outstandng on the first.

Bank of America is offering 5% of the net received by the first to any 2nd lienholder and will also accept the same if they are in 2nd position. In my experience, if the short sale is on your personal residence the 1st lienholder forgives the balance not covered by the sale. Seconds however are a dfferent matter. Again, BoA will release the lien for 5% of the frst lienholder's net but reserves the right to determine a defciency at a future date. Hope that helps

It sounds like you probably need to consult with a real-estate attorney who has short-sale experience, because that last piece of advice simply isn't correct. I know of several other investors who have successfully purchased multiple properties with 2 or more liens via short-sale.

Is any of the buyers who man an offer on the property an investor with short-sale experience, or does any of the buyers have an agent/negotiator with short-sale experience? If none of those are true, then you're going to need some help, because short-sales aren't for the faint of heart.