Money Judgement from a short sale

I'm not sure as to whether or not you've yet agreed to this short sale.  Since the bank wants to review your financials I'm assuming that you are now in the process of all of this.       

Unfortunately, after losing their home in foreclosure or a short-sale a consumer may still owe money to their original lender.  When a home sells for less than the borrower owes, the lender can sue the borrower in state court for the difference between the sales price and the amount owed on the mortgage.  The state court can order a judgment on the difference called a "deficiency judgment".  Further lawsuits can force the consumer to pay the deficiency judgment from their other assets or wages. 

So how can you avoid a deficiency judgment in Illinois?

There are three ways to avoid the deficiency judgment.  The first, way of avoiding a deficiency judgment is to enter an agreement with the lender called a "deed in lieu of foreclosure".  Simply put, the lender agrees to forego the long and expensive process of foreclosure and they get deed to your property in return.  A deed in lieu of foreclosure relieves borrower and guarantors of a deficiency judgment unless the deed-in-lieu agreement or a contemporaneous document says otherwise.    

The second way to sidestep the prolonged foreclosure process and avoid a deficiency judgment is through a "consent foreclosure".  Here a borrower agrees to allow an abbreviated foreclosure.  The lender submits a motion to the court stating that the borrower will not contest the foreclosure and the court grants the foreclosure without further litigating.  In a consent foreclosure, the court grants immediate title to the lender and in return the lender waives the right to a deficiency judgment.   

A third, way to eliminate the possibility of a deficiency judgment is through a chapter 7 bankruptcy.  When a Chapter 7 bankruptcy is discharged, the borrower is protected from the personal liability of a deficiency judgment.  You may however have to file  for a Chapter 13, depending on your income.  Under a Chapter 13 you would have to repay your creditor some of the debt but the amount is greatly reduced.

Hope this all helps.  Good luck.