If the bank approves the short sale you are not responsible for the balance. By accepting it, they are saying they'll taks less then what is owed. However, you should not expect to receive proceeds from the sale and your credit can still be negatively affected. You may also be responsible for the taxes on the forgiven debt, which currently is considered income by the IRS. There is legislation to change this and you can find out more info on that by checking the link below. In my opinion though, a short sale is definitely better then getting foreclosed.