You need to forget about your credit score right now. The BK just killed it. A short sale alone is NOT a big hit on credit, it's the missed payments that hurt the most, second to the BK.
Regarding the 1099c: If you're going to short sale an investment property (you never lived there or did not own & occupy this house for 2 out of the last 5yrs) you will get a 1099c that you will have to pay the IRS on,,based on the negative amount times your tax rate.
I suggest speaking to a CPA, even if this is an investment property you may be able to still file IRS form 987 & try to prove your insolvency (inability to pay).
If this is your Primary Residence & the bank issues you a 1099c, this is actually a GOOD thing, because the bank CANNOT issue the 1099c AND give you a deficiency judgment in the future. If this is your Primary Residence & you receive the 1099c, go to the CPA file form 987 on your 2011 tax returns & you DO qualify under the Mortgage Debt Forgiveness Act of 2007 & you do NOT have to pay any extra income tax to the IRS.
Realtor Since 1996
Main Street Realtors
Short Sale Expert