If I have to choose between destroying my credit (for a time) and wiping out my mortgage debt, or adding $200,000 to $300,000 to my debt, I’ll choose the former every time. That is the choice a person that is seriously upside down in their mortgage is making.
Do I make a decision that affects my ability to get a job for 7-10 years (and credit, and rental properties, and anything else that requires a credit check)? Or, do I stick myself underwater for at least that long, if not longer - but have more flexibility in my finances?
That's why I'd advocate for "C" .... try and figure something out in the middle. Work out something with the bank. Rent. Make "interest only" payments until the market gets better. Or something else that I don't know about.
It's a tough situation, to be sure.