So sorry you are in this situation. It is all too common in Southeast Michigan right now.
There are many articles on our blog about short sales and foreclosure. I have linked to the short sale articles for you below. You can do a search in the sidebar for foreclosure articles if you wish.
You might also want to get in touch with HopeNow http://www.HopeNow.com
As for what happens, if you sell short, then the second mortgage will have to negotiate for what it will accept in a short sale. It will be a few thousand dollars, typically. If you foreclose, then they will get nothing if your home is less than what you owe the first. Your credit card debt is unsecured.
I would be happy to talk to you. Our team has helped many sellers like you with short sales and we are just down Woodward from you in Birmingham.
I first must commend you for your approach and effort in reaching out here to investigate your options. Unfortunately if you don't see yourself getting the cash flow back in order to maintain your payments and savings are depleting, you are faced, like so many of us, with the possibility of foreclosure in the future. If that is ineveitable, we would recommend you consider attempting selling the house. Of course, I understand the upside down situation. Another common situation so many of us are in. Thus, we recommend you consider the house sale attempting a short sale scenario. Rather than explain all of that here, I have included our website where we provide basic information (various links) regarding foreclosure and short sales. Also, I would be happy to discuss your situation if you prefer emailing me or calling direct. Again, I commend you for addressing your concerns in advance of any foreclosure proceedings.
Max Broock ~ Real Estate One