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Please help.....pay rental property mortgage or pay credit cards????

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Please help.....pay rental property mortgage or pay credit cards????

I would really appreciate some advice.

 

With my fiance laid off and my bonuses taken away, we are now faced with a financial nightmare.  We've used up our savings and have resorted to credit cards.  The home we live in is in my fiance's name and remains current - no delinquencies. 

 

I have a rental property that is paid up to date - never a delinquency - with a 1st $240k (6.65%) and a 2nd $60k (12.5%).  Both mortgages total $2300/mth and the renters pay $1850/mth. I just got notice that the renters will be moving out in 60 days, so I need to either sell it or try renting it out again.  I contacted my real estate agent and she informed me she thinks we could get about $280k for the house.  

 

I have about $80k in credit card debt (no delinquencies) - 3 citicards and a Discover card. 

 

We have reached a point were I can't pay everything, so I have to make a decision what should be paid. 

 

Should I pay the mortgages and NOT pay the 3 Citibank credit cards?  Or should I pay the credit cards and NOT pay the mortgages?

 

I've heard pros and cons for both sides:

- don't pay the mortgages and hope the bank agrees to a Short Sale.  This will reflect better on your credit report.  One large negative hit is better than 3 negative hits.

 

- don't pay the credit cards and get to a point were you can negotiate a "deal" with Citibank. Hope for "paid as agreed - not full balance"

 

I contacted a bankruptcy lawyer and they told me I make too much money to file for a Chp 7.  My only choice would be a 13.

 

As of today my credit scores are:

-  TransUnion  684

-  Experian  686

-  Equifax 674

 

We have a 10 month old baby, with another baby on the way.  I have never been in debt or delinquent before and I am stressed beyond belief.

 

I have no clue what to do.

 

Any advice would be greatly appreciated!

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Re: Please help.....pay rental property mortgage or pay credit cards????

In order to avoid cross-posting of the same post, I'm locking this to direct others to your post in Mortgage Loans.

http://ficoforums.myfico.com/fico/board/message?board.id=loans&message.id=44918#M44918
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