First thing you need to do is take the "means test" and see if you qualify for a Chapter 7 or 13. See http://www.legalconsumer.com/bankruptcy/means-test/.
Once you determin this, you'll be able to consider your options. Based on what I'm reading from you, you're a clear candidate for some form of bankruptcy. However, there are two new options -- one of which is already here, the other, an imminent probability:
1. The Treasury Department released its new mortgage refinance regulations on March 4, 2009. They permit lenders to provide extremely favorable refinancing options that could help lower your mortgage payments. So, contact an established lender (e.g., Chase, Wells Fargo, BofA, Citi, etc.) and see what they can offer. They may not be quite ready to offer anything yet, because this is all so new, but it won't be long.
2. Congress is trying to pass a bankruptcy loan modification provision which would give the bankruptcy court the power to force lenders to lower a Chapter 13 debtor's principal balance. This Bill is almost certain to pass in the next two weeks. So, keep an eye on this, because it could be your best option.
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