If this is your only home, a short sale can only be done if the lender approves it and agrees to permit you to do a short sale–thus, they certainly will not agree to a short sale if they intend to seek a deficiency from you. This is a complex area, but generally, a lender cannot seek a deficiency judgment against a borrower if the loan was a "purchase money" loan and secured by a residence. Please note, if the loan was originally made at the time of purchase but was later refinanced, it LOSES its purchase money character, and also, if there is any misrepresentation in the loan documents signed by the borrower (i.e., income was inflated, borrower said he was going to occupy home but did not intend to, etc.), then the lender may seek a deficiency.

Thus the reason for your attorney to tell you to stop making the mortgage payments, it’s a quicker way but could cost you more in the end due to the following area of possible threat. Even if the lender cannot get a deficiency judgment because your loan is purchase-money or because it elects the speedier and cheaper route of foreclosing by trustee sale, it may be able to sue you for something unconnected with the loan obligation per se, such as falsifying your income on a credit application or for trashing the property and thus unfairly reducing the collateral value.

As to your other debts, as long as you pay them as agreed, they should not be affected but your score will go down due to the forclosure on the house.

Hope this answers your question
LEGAL DISCLAIMER: The advice contained herein is for informational purposes only. It is not to be construed as Legal Counsel nor Legal Advice.
References :
http://www.lawguru.com/cgi/bbs/mesg.cgi?l=all&c=17