Any possibility that you could explain this more fully? I don't understand at all what you are trying to do.
So I'm trying to make a shape out of the inside (like a frame) so the photo can sit inside of the blue shapes
As I (mis)understand it, you may wish to do this:
1) Select the blue shreds and Object>Compound Path>Make, or just Ctrl/Cmd+8 (holding Ctrl or Cmd and pressing 8);
2) ShiftClick the photo to also select that and Object>CClipping Mask>Make, or just Ctrl/Cmd+7 ( holding Ctrl or Cmd and pressing 7).
If you simply wish to turn the blue shreds/rips into an irregular frame round the photo, maybe with additional shreds to cover parts of the photo inside, you can just add those shreds on top of the photo and leave it at that.
I doubt whether that is the case, but that brings us back to the question that Peter asked at the very beginning.