What's Better for the Seller...Short Sale or Foreclosure?

Both short sales and foreclosures can have short-term as well as long-term consequences for the homeowner (seller).

Here are several specific circumstances as I understand them:

• Both will have a negative affect on the seller's credit rating
• Short sale "forgiven" debt becomes an obligation payable to the lender
• Foreclosure eliminates the debt which the lender has no recourse to collect
• Short sale "forgiven" debt may be considered a "taxable event" by the IRS
• Foreclosure debt doesn't result in a "taxable event" by the IRS

If you are facing either of these, it's important that you consult with your accountant or legal counsel to determine the potential consequences of your particular situation.