If creditors have taken you to court 2 times does that hurt your credit more than bankruptcy.

Generally speaking it is a bad idea to try to pay off some creditors before filing a bankruptcy. If you want to avoid a bankruptcy, I suggest you engage an attorney to advise you and attempt to negotiate a deal with all of your creditors. Beware of debt reorganizers who advertise on TV and by mail. They are almost always overpriced and totally useless. If there are good ones out there, I see no way to sort them out from the bad guys. Use an attorney. At least they have a license to lose if they don't perform.
If you make payments to some creditors, while leaving others out, you may then be forced into bankruptcy by your remaining creditors. If you are forced into a Chapter 7 bankruptcy, then the Trustee in Bankruptcy will be very likely to file to recover the "preferential" payments you made to creditors before the bankrupctcy was filed. Yes, they ask about this. Yes, they will find out if you fail to answer truthfully. This is especially true if you owe the debt to an insider, like your Mom or your business partner. The Trustee has extremely powerful methods of collecting these preferences from the payee. It's not pretty. Also, the Trustee can collect from you. Worst of all, the Trustee may move to deny you discharge in bankruptcy. Very bad.
There are a few debts that you may want to pay before filing a Chapter 13 wage earner plan instead of a Chapter 7 bankruptcy. If you owe back taxes, alimony, child support or student loans, ask your attorney for advice on whether you should make any payments BEFORE you make the payment.
If you have already been sued twice for unpaid debts, your credit is already as bad as it can be. Filing a Chapter 7 bankruptcy tells prospective creditors two things. 1. You now have no unsecured debt. 2. You will not be filing another Chapter 7 bankruptcy for at least 8 years. That's much better than, "I'm a judgment debtor who could have their wages garnished at anytime or have their bank accounts attached at any time." No sane person lends money to judgment debtors.
Lots of people will even advertise to lend to people fresh out of bankruptcy. Watch your mail box and then throw their offers away. Filing a Chapter 13 improves your credit also, but only after you finish the 3-5 year payment plan successfully.
Finally, I note that this advice comes from an Ohio attorney. While bankruptcy law is Federal, some things will depend on the law of your own state and the peculiar customs of your local Bankruptcy Court. Be sure to get advice from a local bankruptcy attorney. Ross Smith, Attorney, Sandusky, OH