Most people didn't see the problems even though they were screaming in their face that it will all collapse, but that is another story.

Since you may consider bankruptcy can I assume that you have negative cash-flow from your rental income?

It depends on how deep in debt you are and if bankruptcy is the best way to solve the problem but I would only use it as a last resort if anything else fails.

You said most are rented so you have vaccant homes as well, correct?

Depending on location and the local market could you sell those? They are just huge liabilities on your balance sheet.

Since you have 26 properties I would do a list (I hope that you already have one) and see which property is cash-flow positive. I would try my best to get rid of those that are cash-flow negative.

There are a few options that you can consider. Choose bankruptcy only as a last option.

I agree with Hermes on this one... I would also evaluate your partnership and any contracts related to it. Your deceased partner's spouse may not be able to just pull out. If there is a contract within the partnership, I would seek legal advice.

If you own 26 properties you have assets you can still leverage, though I appreciate that the market isn't good at present.

Either way, as pointed out above, there's little point trying to file for bankruptcy until you've tried to get what you can from your assets, which at this moment in time may yet offer the liquidity you need.

2c.

Selling the houses that are creating a negative cash flow may require the mortgage lender to take less than is owed on the property. With the market saturation we have and potentially more on the way, the last thing he wants is another house to foreclose, fix up, market, and sell. This takes time and costs him money. Work hard at finding a buyer and make a reduced offer to the bank (short sale) with the understanding that the title is clear and you are released from deficiencies. With some hard work and quick actions, you may still pull yourself out of the mire before you lose everything.

You asked about 7 or 13. I am not an Attorney but will share what I understand. With 13 you are not getting rid of the debt, simply restructuring a payment plan. Verify this with your lawyer. On a 7, you give up all assets and liabilities, starting over at zero, but may be able to reaffirm those liabilities you desire to keep. This could allow you to keep your primary residence. Again, talk to your attorney.

Good luck.