Foreclosure imminent -- Need Advice -- HELP!!

[Palmetto25]

What is the name of your state (only U.S. law)? FLORIDA

Unfortunately, due to illness and the economy, I can no longer afford to make the mortgage payment for my home. I have been current in my mortgage payments since the start for nearly 10 years ... But, this month, I had to face facts and I decided it was no longer financially feasible to continue making payments.

My mortgage+HELOC = $320,000 and the home value has drastically fallen and is now appraised at $200K. I am self-employed and have had poor/low returns with deductions for the past two years. Thus, I am doubtful if any refinance with a value remodification option is even possible in my case. I hate this situation but, like many Americans, circumstances have placed me in an unfortunate position.

I have the following questions:

(1) As I said before, I have called lenders for options with bad results. But is a loan refi/modiification even a possibility? If so, please detail any specifics and whom I should contact / what I should ask for.

(2) If not, then which is the best way to deal with the home. Foreclosure, short sale, deed in lieu of (not sure what it is called) or other? What recommendations do you have and how should I contact the lenders? What is the best option and what will hit my score less harshly (although I realize it will be a big hit)?

(3) A close family friend has told me that bankruptcy should NEVER be an option. I would be much better off taking the hit on a foreclosure and aggressively building my credit for the next 2-4 years while the foreclosure ends its 7 year period on my personal report. Is this sound advice?

(4) My first missed mortgage payment will be this month. How long until my credit reports receive the negative report?

(5) I am current on my personal credit cards and pay them off or pay the minimum fee regularly and on time. However, I know that once the mortgage negative report begins, my credit cards may decide to lower the credit limits or increase the interest rate. Is there anything I could do to minimize this? Have the new laws protected any current balances from increasing in interest rate?

(6) I do have one business credit card that is also personally guaranteed. It does have a high balance due to business expenses and medical insurance. I could struggle and continue to pay the card and stay current. But, the option to not have to pay this particular credit card's monthly charge would certainly take stress away from me and allow me to get back on the right path. My credit score will take a big hit regardless because of the mortgage/home. So, would defaulting on this one credit card affect my score much more OR would it be just another negative report that will remain on my credit report for 7 years? Will defaulting on this CC affect my other CC any more than if it was just the mortgage/home's negative report?

Thank you for your help.What is the name of your state (only U.S. law)?