for the bankruptcy protection is definitely an option...
However - that might take longer that foreclosure... and will damage your credit more severe.
Still a short sale would be the best option if you have no way to come up with additional $20k.
Please be aware that the student loan generally may not be cancelled via the bankruptcy.
And 401(k) assets are protected.
The bankruptcy generally should be viewed as the last resort...
I would suggest to contact a real estate agent - and explain the situation - that you are looking for the short sale.
The agent will suggest the sale price - and you will try to get pre-approval from the creditor.
Still - you will have your house listed for sale with a short sale option - so potential buyers will know that the approval from the creditor is required.
If the creditor disagree with the short sale - you will likely stop payments and ask them to foreclose.
That what I would suggest...