ADVICE PLEASE CCCS/Foreclosure vs. Short Sale vs. Deed in lieu of foreclosure

[txhelp]

I have to admit that this forum has helped me come out of extreme hopelessness! I appreciated replies and reading other peoples situations.

I hope this is not flagged as a "duplicate" post, since we have decided not to file for bankruptcy. We do not want the home in question. It has been "trashed" by renters (10K) damage and there is no way we can repair it (insurance doesn't cover). We have tried to sell it for 2 1/2 years. We have decided against bankruptcy because student loans would still be there. So basically we are trying to decide what will be worse on our credit in the long run.

Here is the situation:

Debt:
Student loans 135,000 (direct federal, recently consolidated for IBR & forgiveness option)
home 42,000 (don't want to keep)
vehicles (2) 8,000
credit cards 21,000
We rent a home where we teach 600 mth.
5,000 or so in medical and utility bills

What is the best way to go? Any advice will be greatly appreciated.

1. The house is foreclosed, we go through CCCS to pay down credit cards to help get out of debt (except of course student loans)

2. We attempt a short sale or deed in lieu of forclosure , go through CCCS to pay off credit cards

3. We attempt short sale or deed in lieu of foreclosure, do NOT go through CCCS and use extra money to pay credit card debt down

I realize our credit will be seriously affected, but we are trying to figure out the best way to get out of debt and be responsible for our actions.
Thank you for any advice/help!

[HHM]

You are focusing on the wrong question...your credit doesn't matter, all those options are EQUALLY BAD. So it doesn't matter. Also, do you even know if the bank will accept a DIL (most won't, it is actually quit rare to get a DIL).

You are needlessly ruling out an option that will likely be the best, least costly way to deal with your situation. You will have a deficiency balance on the home you must address.

To be of any use, we need to know how much you make, where you live, and household size.

[txhelp]

From what I have researched, Short Sale and Deed in Lieu can be better on your credit report in the long run, of course if you can negotiate it ( I guess this is not true).

Total income Gross 87K
4 in household
rural Navarro county Tx

Thank you for your help.

[justbroke]

From what I have researched, Short Sale and Deed in Lieu can be better on your credit report in the long run, of course if you can negotiate it ( I guess this is not true).

Both short sales and deed in lieu (DIL) are very difficult to obtain! Ask anyone who went through a short sale all the way to closing and the bank pulled out of the deal. Also, they have the same afefct on your credit report in the long run. Most underwriters -- of mortgages -- treat them the same (foreclosure, deed in lieu, short sale). In each of those cases, you settled for "less than the balance of the debt".

At least you live in Texas where there are no garnishments allowed on payroll. Your best option is the one thing that you don't want to do. yes, it starts with a "B". The best way out of debt and to get a fresh start, is only "B".