Although I would like to add two things that may or may not apply to your case.
A) When people short sale a property there should not be any proceeds available to the seller. All the proceeds usually go to the lien holder(s). Based on the description of a short sale it should be basically impossible for it to be any proceeds available to the seller. Again, the property is being sold for less that what is owed - so there should not be any proceeds left.
B) In general, holders of a HELOC can pursue the sellers for any deficiency. This is unless everything is carefully negotiated during the short sale, and the holder of the HELOC agrees in writting to settle for a lesser amount.
Again, this many or may not apply to you - and there might be exceptions to this.
If you were my client I would encourage you to seek the counsel of an attorney who specializes in this type of law. The author of the article I mentioned is attorney Marc McCain with McCain & Bursh PLC and his firm's number is 602-604-2166. This is a much more complicated subject that I think any Realtor can address under the scope of what we are licensed to do.
Good luck and best regards,
I have extensive experience in negotiating short sales and hold the CDPE designation (Certified Distressed Property Expert). I will be happy to assist you in the short sale of your home.
You may contact me at 480-466-0264.
There are no solid yeah or nay answers we can give you on this forum. It does require a solid conversation where the many variables are outlined. We use both real estate and tax attorneys as part of the process. This is done because what you are talking about involves restructuring pre-existing contracts and dozens of legal and tax law questions best done by a really savvy law person.
Our team has worked on hundreds of short sale and has a lot of experience helping people like yourself. We'd be honored to help you as well.
Having experience in Short Sales would lead me to think its very likely you could have issues whether you Short Sale or Foreclose.
One good thing about Short Sale is that we can often reduce the amount you owe to a much smaller (sometimes 0) amount.
Give me a call or email, glad to discuss it with you and provide some clear direction.