If you're in a position where a foreclosure may be imminent, know that you might have another way out. A short sale is when a lender determines that it will accept a mortgage payoff that is less than what you owe; when you're in financial stress, this may be one of the best options open to you. You need to make sure that the lender agrees to forgive any remaining debt if you agree to a short sale price, because otherwise you could be left paying the difference between what you owe now and the sale price of your home.
As the seller, you may hope to sell the home for a profit or even to break even. That might not be a possibility, so resolving your debt may be the next best solution. A short sale allows you to do that without taking on debt for a home that you no longer live in. Of course, you will lose your home, but you won't have a foreclosure on your credit report. Your credit may still take a hit, but the lender may help reduce that hit by negotiating with you.