If costs are a factor for you then you can speak with a Hud Counselor who will assist you for free in your area. Here is a link. I wrote an e-book if you are interested in returning to home ownership after short sale and i will be happy to send you, provide me your email address and I will send over.
The Credit Repair Expert
I am not sure if the debt cancelled document is from a chapter 7 discharge for this loan or another loan. However, if it is a discharge on this loan, you must reafirmed the debt to do the short sale and thus places the discharge in question.
If these answers do not answer your question,please clarification the question.
First Weber Group
Certified Distressed Property Expert