First off I am not an attorney (but I am a realtor) so take the advise for what it is worth. You have not said what the actual problem is. You are current on the mortgage and have no other debt. So why do you want to declare bankruptcy? Just because others around you are having problems paying their mortgage does not mean that you are having the same problems. There is no way to do a conventional refinance due to the fact that the property will not appraise for what you still owe on it. You may be able to approach your lender and see if they will lower the interest rate but since you are current on the mortgage they have little reason to do it. Also 6.25% is not a horrible rate - you could probably get 5% today if you were very lucky. Not paying your mortgage will do nothing but destroy your credit rating and that is not what you want. So long as you are living in the house and have no reason to move I would say just don't worry about it. Yeah you got screwed on how much you paid for the house and it will probably take at least a few years for the value to come back. The neighbors who just walk away are really in trouble. They destroy their credit rating and when the bank forecloses they can still go after them for any deficiency over what the house brings when sold. A lot of people sell the house for less than what they owe which is called a short sale and needs the banks approval. What they don't realize is that the government considers that difference that the bank forgives as income (so you have to pay taxes on it) not to mention, just like before, that it destroys your credit.

Many companies that offer various mortgage services today are just rip offs. They offer reducing the number of years you pay by increasing the number of monthly payments each year from 12 to 13. Many others offer software to do the same thing and "only" charge $3000 for it. Huge rip off.

While the situation you are in may not be good it doesn't sound like a diaster. You apparently could afford the mortgage in 2006 and should be able to afford it today. The fact that your house is not worth what you paid for it does not matter until you want or need to sell it. I would do nothing. If you want to email me about this feel free to do so. Good luck in any case.