How long does a creditor try to collect payment before deciding to sue?

It depends on how aggressive the creditor is. Creditors usually don't file a lawsuit for a few months after the default. Some never file. However,...

You both would want to have the judgment vacated (if it was against both of you). Until then, the garnishments will continue.

What should we do with our home?

Did you receive a discharge in your chapter 7 yet? You also might want to consider negotiating a "cash for keys" settlement.

Bank is refusing to tell us whether loan modification is possible without quit claim deed?

The bank does not have to provide an exception for this requirement.

Once the bank rejects a short sale offer and takes the house back can the buyers sue for breach of contract?

It depends on the terms of the contract.

Can I file a complaint against against my lawyer ?

Here is a link to submit a request for investigation: https://www.iardc.org/htr_filingarequest.html#2