Short sale and DIL are the two most popular ways to avoid foreclosure. But one should try out short sale first because it is much better than deed in lieu. DIL affects you credit much more than short sale. DIL drops your credit score by 250 points, where as in case of short sale, your credit score will be dropped 50 to 80 points. Not only that, the lender will see that at least you have tried to pay him by selling the house. After the short sale process you can be approved for another mortgage within 18 months. So if you can’t pay your mortgage in any way, talk to your lender; and through the process of short sell try to get out of the mortgage.