A homeowners has an option to "short sale" when their property is worth less than what they owe to their bank(s). For example, if your house is worth $400,000 and you owe your bank(s) $550,000 in loans, home equity lines of credit, tax liens, etc. If you qualify for a short sale, you may be able to sell your property for less than what is owed, avoid foreclosure and walk away from the property with no debt. A short sale is a far better alternative to foreclosure, both for you and your bank. It is significantly less damaging to your credit, and you'll be able to buy a home much sooner after a short sale than with bankruptcy or foreclosure.
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