Very quickly a short sale is something negotiated between the bank, current seller and a buyer to take less money then a seller owes. If successful the debt is erased and is less costly to the lender then a foreclosure.  Takes time and effort.

A foreclosure is when a seller walks a way and lets a bank foreclose on the amount owed and sells the home to the highest bidder. The seller is still responsible for the debt if there is a difference. The bank can attach any other property or future earnings.

Both affect personal credit for a period of 4-9 years.

Note: Seek the advice of a attorney and CPA and a good real estate agent!