Foreclosure may be my only hope. What happens after a foreclosure? Should I file for bankruptcy?

I brought my first home when the market was high. Thinking that if I didn't buy then the cost of owning a home will only get even higher. Now with this economy. My home isn't an investment in my future, as I lost over 50% of its value. And I owe way more then its present market value. Tried to resale. But when there are homes going for almost pennies on a dollar- I can't sell. Even tried short sale no luck. I'm thinking of letting it go. As of right now I haven't been late or missed a payment. On top of it all i need to refinance my home due to 3 year arm that is ending in Oct. What should I do.