One of the first issues that a homeowner must consider when evaluating the benefit of a short sale is whether or not the lender will accept the sale proceeds as full satisfaction of the mortgage debt. In other words, will the lender accept less than what it is owed or will the lender require that the homeowner obligate himself to make payments on the deficiency until this amount is fully paid. Given that the most significant benefit to the homeowner in a short sale is the release of his obligation to pay any deficiency, this issue has to be negotiated on behalf of the homeowner with the lender before he enters into a short sale. Further, if there is more than one mortgage then this issue must be settled for all such lenders.
If the lender agrees to the short sale process but declines to waive the deficiency then the homeowner may consider other options including foreclosure and bankruptcy. Bankruptcy has a number of substantial consequences, and requires the use of a qualified attorney. Bankruptcy affects more issues than simply relief from the deficiency on the residence, but it is possible that the homeowner will get relief from the deficiency through bankruptcy.