Options you have when you must sell and you owe more than the value of your property.
Bring money to the closing to make up the difference – By far the best and quickest way to go if you can manage it, and worth the money. No future tax, credit, or legal problems. If you have the money, the bank will know and after waiting months on a short sale, you may still need to pay the bank some or all of the difference. A normal sale will produce a higher selling price and a quicker sale saving you time and money.
Short sale – Make sure your Realtor is successful in this area, has SFR and CDPE designations and has testimonials and referrals. Talk to your CPA about tax issues. Possible future tax and legal issues, and/or wage garnishment if not handled properly. You could still unknowingly owe the difference if not handled properly. Or, if handled properly, no tax issues, legal issues, credit issues, or wage garnishment. The experience of the Realtor handling the short sale is the critical key.
Foreclosure – Stop paying your mortgage, and do nothing. Surety of future legal issues, tax issues, credit issues, and/or wage garnishment.
Deed in lieu of Foreclosure – Surety of legal issues, tax issues, credit issues and/or wage garnishment.
Bankruptcy – speak with a bankruptcy attorney. Takes a long time and still may have some long term tax, credit, legal issues and/or wage garnishment. Ask bankruptcy attorney about future issues and get the answers in writing so you can remember what was said. Or take notes. Bankruptcy goes on for years and affects every aspect of your life. This should be your last resort.