You really need to talk with a bankruptcy attorney. If you have come to the conclusion that you will walk away from your house and stop making payments, you should be able to afford a bankruptcy. You will be able to stay in the house rent free for a while. If you do not file bankruptcy, you can be sued for a deficiency on the first mortgage, the full amount of the second mortgage, and by the credit card. Bankruptcy would eliminate all of these potentials, and give you a fresh start.
You can always file bankrutpcy. Doesn't have to be now. Have you considered finding a listing agent, short selling the home, and negotiating the cancellation of the debt? If you successfully sell thehome and get teh debt cancelled this year, it will be a tax free event.
You owe it to yourself to consult with a bankruptcy attorney about your specific facts. Most do not charge for the consultation; but you will get far more complete advice by sitting down with one.
Both foreclosure and bankruptcy will have credit report implications. Both are financial choices, and money is never a moral decision. As long as what you do is legal, you are simply deciding what is the best financial decision. Bankruptcy will stop the negative marks on your credit, immediately upon filing. If you do not file, your lenders, credit card and otherwise, will continue to report you as late for many years to come. And don't worry about getting credit because of the bankruptcy. You are likely to get credit card offers and car loan offers as soon as you file. Happens with almost everyone of my clients.
It may be that a short sale is a better option; but until you sit down with a bankruptcy attorney to discuss the pros and cons of each course of action, you are really just guessing.
Just walking away may actually prolong your credit score recovery so you should speak to an attorney, specifically a bankruptcy attorney. Most offer free consultations to go over options. I would especially be concerned about the second mortgage. Many second mortgage holder sue borrowers personally since the value of the underlying real estate will not be enough to pay the second lien holder...in fact what you could sell the real estate for can often time not be enough to pay the first mortgage in full.
The problem you can have is that you could live for free in the property for a long time but your credit report will reflect the default of the mortgage payment for as long as the foreclosure case is pending which in Florida can be two years or more. Then when the bank finally gets a foreclosure judgment against you it is then reported as "foreclosure" on your credit report for seven years from the judgment being entered so that is 2 years of late line items on your credit report plus seven years of the "judgment" reported on your credit report. Filing bankruptcy may actually help you recover your credit more quickly. Plus if you have judgments and you gain more assets later your creditor may come out and try to take what you have accumulated later on when things improve.
In your question, you ask if you can just walk away and start new. Just walking away will not be a new start. Sooner or later the mortgage company will file a foreclosure. There are two reasons for foreclosures, one is to get a clean title and sell the house and the second is to collect money.Even if you do not have any money to give, they will still end up with a judgment against you that could ruin your credit for as long as 20 years. Even if you don't file a bankruptcy now, you might find that you have to in the future in order to reestablish your credit. It only takes about two years after the bankruptcy for your credit to recover. As long as you have an active foreclosure judgment, it will be nearly impossible for you to obtain any credit for the purchase of cars for future homes.
If you are in my practice area, call me for a free phone consultation. 407-894-1002. Answering a question on this website does not create an attorney-client relationship. I'm not officially your lawyer until we have had a one on one conversation and you have signed a retainer agreement. I practice bankruptcy in Orlando only. I practice Social Security Disability law throughout the State of Florida. Offices 2110 E. Robinson St. Orlando, FL 32803.