One of the things with chap. 13 is that it lets you dump all your other debt and hang onto your house as long as you can keep making payments. Whether it makes sense to give the house up to foreclosure really depends on what the place is worth (which is usually more than what you could get for it in a distress sale). Filing a bankruptcy petition puts a stay on foreclosure proceedings, but if it really wants to, the bank can get proceedings reinstated. If you're already in bankruptcy, you should be in a better position to work out a short sale (meaning the bank agrees to take what you can get for the house instead of the whole principal amount). Also, one of the things Barack & Joe seem to be pushing for is a bankruptcy provision that allows the court to do a cramdown of upside-down mortgages, meaning the judge could get the trustee (or somebody, maybe you) to get the property appraised, adjust the principal balance to fair market value, and reset the mortgage based on that principal amount. Then, under a chapter 13 plan, you'd pay the renegotiated mortgage but still be able to keep the house. Except they haven't passed anything like that yet and probably couldn't until the end of January. Best bet is to talk to a bankruptcy lawyer to figure out options. The bottom line is that if you can figure out a way to hang onto the house, that's probably your best bet. Good luck.