Bankruptcy is not for everybody, but sometimes it is the best way to have a meaningful negotiation with your lender. Whereas foreclosure mediation is generally limited to a HAMP modification, bankruptcy court offers sanctions to motivate lenders to come prepared with full authority to make a deal.
Thus Chapter 13 Bankruptcies have been on the rise. Known as the ‘Wage-Earner Plan,’ Chapter 13 protects your assets while you make payments, and allows you to catch up on unsecured debt. It acts like a consolidation loan—you make payments to a Bankruptcy Trustee, who then distributes funds to your creditors.
Bankruptcy should not be entered lightly. Especially because of the complexity and recent major changes to the law, consult competent legal counsel before you file any chapter of bankruptcy. For general information about Bankruptcy, the US Courts offer the following link: http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter13.aspx.