It seems many people are looking for ways to escape their housing situation due to their mortgage terms. Though I feel like I've posted some blogs lately focused on some of the negative aspects of the industry, people in desparate situations can often benefit from information just as someone who is less under the gun.
MSNBC posted an article addressing the question of whether or not to take on bankruptcy or foreclosure if the finances can't meet the needs. The response of the author was interesting.
The first point is to try to avoid either as much as possible. If you're in trouble contact your lender now. Don't wait until the foreclosure process has begun. If it has, contact them anyway. If you can see things are not looking good, address them honestly as soon as possible. There are options to help home owners get back on their feet.
Next, if you have to (and a good lawyer will be the best consultant), don't foreclose on the home. If you file for bankruptcy protection but don't lose the home, future lenders may consider that. If you walk away from the home and foreclosure occurs, lenders will weigh that out heavily in the future.
Finally, if your budget simply won't let you get back on your feet and you know you will have to walk away no matter what, be sure to tie up all loose ends as much as possible. You can start over and get your finances back under control.
The key thing is to understand your options. Contact a professional who can help you out. A good Realtor or Lawyer can help. In fact, lenders tend to be more negotiable when a good third party is involved.