forelosure vs short sale vs ch 13--help!!

[SuzieQ]

This is a very long post, but I hope someone will read it! I know this is a fourm about avoiding foreclosure if possible, but we may need to let the bank foreclose on our house, and we need advice so badly. We live in NC and own a home in another county that we had to move out of a couple of years ago due to a job relocation. The house is a fixer-upper and has needed repairs for a long time, but we could never afford them, so we just lived with it. We also have negative equity due to a very poor decision on my part to get a no-equity 2nd mortg. from ditech to consolidate my huge student loan balance and credit cards. When my husband accepted a job with much greater earning potential but requiring us to move, we thought we would not be able to get what we owed out of the house if we put it on the market since it needed a new roof and windows and we had no negotiating room on the price. So we thought we would leave the house empty for a short time, keep up with the mortgages, and start working on getting the roof and windows replaced. We leased a house in our new location, and we moved. Needless to say, my husband's great new job did not end up to be the great deal we had hoped--we were able to keep up with all of the house pymts, but there was not enough to start repairing it. We didn't want it to sit empty forever, so we got renters into it, but due to area economics and the lower-income of the area, we were not able to rent it out for our full mortgage payments, so we have been paying the 2nd mortg, insurance, taxes, and repairs every month. But we figured it was better than losing the house, and we kept believing better times were around the corner. Then my husband lost the "great" job that we had relocated for,and took one making less money, and we have been barely hanging on ever since. Now we really could not afford to keep up with the old house. We have even more negative equity since the market is slow. The house is needing more minor repairs and general maintenance due to its age, and we can't keep up. We've run up every credit card we have just trying to live. Our renters have been behind on their rent due to their own financial problems; they've tried to get a mortgage to buy the house themselves but were unable, but they were hesitant to buy it anyway, knowing the work that the house needs. Now they are moving out in about 3 weeks for a cheaper house. We don't know what to do. We desperately need out from under this house. We are 2 mo. behind with ditech and I have received a default letter with June 2nd as the cutoff date for paying up and getting current. Even if I do that, we have no extra money with which to keep up the 1st mort. until we get new tenants into it; but that just puts us right back into the cycle of repairs and payments that we can't afford. We are trying to decide between bankruptcy (prob. Ch 13 due to our "above-avg" income) and just foreclosing on the house. I have read all about short-sales, but don't know if it would be any better for us than foreclosure due to our neg. equity from the 2nd mort--I believe the 1st mort. could get paid off (it's with Citifinancial) and they have told me in general terms that they are willing to do short sales. It's ditech I'm worried about--we have a balance of $40,000 with them and I wonder if they would come after us for that and garnish our wages. I know that's a possibility with foreclosure also, because ditech probably wouldn't get paid. If we're going to get sued either way, I wonder if we should just foreclose. Does anyone have any idea about ditech's aggressiveness? I haven't called them yet because my head is spinning with all of these different options. I'm very uncomfortable with Ch 13 due to the length of time that we would be in it (5 yrs). If we foreclosed, and we no longer had any money going toward that old house, we could feasibly pay off our credit cards within a couple of years, and put money in savings, and it would give us some positive credit activity against the foreclosure. I just don't know if it's worth the risk of ditech coming after us. If you've read this whole post, bless you for your patience and please offer any opinions or advice you have!