Options with Mortgage Arrears

kig

We have been having trouble with our mortgage for some time, but have spoken to our bank from day 1 when we thought we would be getting into trouble (as they tell you to do). Unfortunately following the bank's rules hasn't paid off for us.
We went through the whole process, 'negotiation', and the bank then dictated the terms of a deal, which we told them at the time, was not doable for us. We appealed and were turned down again. It's only after being through the process that you realise, that far from trying to help you, the banks are only going through the motions, because they are forced to by our government, and that all the agencies that we dealt with, who we thought were independent, ie. the IMHO, the financial ombudsman, the appeal board, are all part of the banks - set up and funded by the banks - so much for independent bodies overseeing the banks, who put us in this situation.
Anyway, I now need advice, the bank has offered us a split mortgage with a lump sum payment (cleaning out our last savings). The problem is we cannot make the monthly payment work - it will almost be half of our monthly gross income, and when you're earning in the region of €30k, you can't pay other bills, and our unworkable budget doesn't even allow for the next lot of taxes (water charges, etc) which are going to be lumped on us soon.
If we don't manage the monthly repayment set by the bank, what will happen?
Far from being a mutually acceptable, sustainable solution, which is bandied about in all their documents, we have been dictated a unworkable solution. And we get the feeling that now that the property prices are rising again, that the bank is trying to force us to sell. Which would be fine, if we could afford to rent anything that we can afford for a family of 4.
Please any advice will be gratefully received, we don't know what to do!