A bankruptcy is a long standing negative record on your credit which cannot be undone. A mortgage foreclosure may be permanent but also can be softened if you recover financially and pay the bank in full. Even after the time elapses when credit reporting agencies can report the bankruptcy on your record, lenders still ask you if you ever filed bankruptcy ( or been foreclosed on) so both are potentially there for ever with no way to avoid the past.

In terms of FICO scores alone the bankruptcy will lower your score more.

Just one caveat, if you get a huge inheritance or hit the lottery, you could go back a pay off all the creditors but then you probably can pay what you want in cash.

Based on most mortgage documents, you are liable for the loan and expenses of foreclosure, so if the bank does not get its money back you still owe them. However, rarely does the bank go after people trying to get blood out of a stone.

If you go through the foreclosure and you have substantial equity in the house, follow the process to the end, as in some cases the amount the bank gets in the foreclosure sale exceeds the loan.
There will forever be a recognition of the Great Recession and I believe lenders in the future will be somewhat understanding and even more so if you make good eventually or pay a bigger down payment.

On the other hand you may be under so much financial pressure that bankruptcy is the best alternative if a fresh start is, with all things considered (which facts I have no knowledge of), best for you.

I believe bankruptcy is more detrimental than a foreclosure. Foreclosures will show on your credit for up to 7 years. It can always be removed. A bankruptcy will just sit there on your credit. The creditor may argue for a deficiency judgement against you for any monies not recovered.

It is absolutely worse to have a foreclosure. Credit scores are generaly higher if you have a bankruptcy, and lose your home to foreclosure, than to just have a foreclosure.

If you file for bankruptcy, you have the right to have the home loan listed on the credit report as a $0 ballance owed due to bankruptcy. Without the bankruptcy, they will label it as foreclosed and still list how much you owe. The reduction of your ballance to $0 under bankrptcy makes your score higher.

Under bankruptcy, you are also not liable for the payments. If they just foreclose on you, the bank can sue you if they do not resell the house for as much as you owed them. You would be responsible for the difference. Bankruptcy eleiminates their right to sue, and you can just walk away with no obligation.