Actually, and no offense to MsChybil, but I want to correct alot of this:
#1. You can file a 7 and keep your house. In fact, a 7 is a great stepping point into a Loan Modification and/or forebearance program.
#2. If your house is underwater and you can't get a principal reduction, don't keep it.
#3. If your car is underwater, no respectable attorney would let you reaffirm it. Also, you don't get a lower payment through reaffirmation.
#4. If you qualify for a CH7 and choose a CH13 anyway, well, that'd be pretty foolish unless you were doing something crafty like stripping a second mortgage in the 13 . Sorry for the tough love, but what you're saying is "I think I'll choose to put myself in hock to the court for the next 5 years, just for fun".
For your house/foreclosure: as soon as you file an automatic stay will be put in to place... you don't have to make payments and they can't foreclose until the stay is lifted (they file paperwork to do that) and/or your BK is discharged/dismissed (which automatically lifts the stay).
Finally, find an attorney who handles both BK and Loan Modifications. People who try to get loan mods on their own will fail about 90% of the time (According to the Attorney General of Nevada). Finding an attorney who guarantees your loan mod, in writing, is the way to go. It can be handled before / during / after the BK and the right attorney can postpone any sale that pops up while you're in a mod.
Good luck,
-SM
Starting Score: ~470 preBK(8/2010)No offense taken, SoulMaster. We did our 13 long before the mortgage disaster and I had already been denied a modification. From where we were, it made the most sense at the time. Nevertheless, we still ended up converting to a 7 when the plan was nearly complete, because we couldn't keep up the plan payments and our current debt, but we were able to keep our cars and house. The balance on the cars was lowered through the plan. By the time we switched to a 7, they had been nearly paid off and the house payments were current. The car notes were by then past the SOL and nobody came to get them. I ended up paying a little bit for a clear title when I traded my vehicle in. Notice, we drove those old cars for quite a long time! We have new new cars now.. 
We didn't know anything about stripping a second. In fact, at the time we had a ton of equity in the house. Not so much,anymore since the economy tanked. Thankfully, we're not underwater. We probably could have done a 7 from the start and stopped the bleeding a lot sooner, but we were in no position to find another place to live and buy "new" vehicles. We were hanging on by the skin of our teeth. Things worked out in the end. My only regret now is not having looked at my credit for 2 1/2 years after the bankruptcy was done. HUGE mistake, but we're working on it.
@krielly wrote:It is my understanding that you must be current on your mortgage payments at the time of filing if you wish to keep your home in a Chapter 7. A Chapter 13 plan, if you have the means to support it, WOULD allow you to get caught up on your arrears. A Chapter 7 will stop a foreclosure, but if you remain in arrears on your mortgage, the bank can file a motion to lift the stay on the foreclosure and/or foreclose once you receive your discharge. As others have suggested, speak to an attorney about your options. Don't assume a BK will save your home without speaking with an attorney about your specific financial situation. Good luck!
You are incorrect. In most cases, though not all, you can have your arrerages put into forbearance at a minimum. In most (and other) cases, you can complete a loan mod after a BK7 which will do the same thing AND lower the payment. They key here, though, is don't reaffirm. If you reaffirm and then try a forbearance/lmod, you wind up screwed because they foreclose, then sue you with the reaffirmation paperwork in hand (unless you live in a non-recourse state, but even then, you should NEVER reaffirm in a BK7.
krielly is right on one thing though: you need an attorney. In fact, you need to hire one that does BK and loan modifications/short sales if you want it all done properly. I'd interview several, and go with the one where: A. You meet with a REAL attorney (not a paralegal) and B. S/he gives you more than 5 minutes of their "oh-so-precioius" time. (In other words, don't go to a BK mill or you're pooched.)
Cheers,
-SM