If your mortgage(s) is more than the value of your property, a short sale can free you from the negative asset that your house has become and allow you to purchase another property at market value so that you can start building equity.  With an underwater property, you are basically paying rent to the mortgage company because you are not creating equity in the asset every time you pay your mortgage.  If you have received a bankruptcy discharge, surrendered the property expecting the lender to foreclose, but they have not, you are still responsible for the property because the deed is still in your name.  That means taxes, insurance, homeowner’s association (HOA) dues, condo dues, and county requirements for yard maintenance are all still your responsibility even though the lender cannot pursue you for collection of the mortgage.  A short sale can end your continuing responsibility for the property.  Because a short sale historically has minimal negative impact on your credit, you can start rebuilding your credit sooner by doing a short sale rather than waiting on a bank foreclosure, which will have a major negative impact on your credit.  In addition, a short sale is viewed as a more responsible way to handle an upside down mortgage because the sales price is generally at market value rather than a diminished foreclosure sales price.  Selling at market value in a short sale will positively impact the value of properties in your neighborhood and does not create a court docketed foreclosure on your credit and the public record.  In addition, many of the mortgage lenders have been giving short sale incentives and paying moving expenses if you do a short sale rather than a foreclosure.