Foreclosures & Short-Sales. What's the difference?

I am new to foreclosure and short sale part of this industry. I need to educate a client on these two aspects but I can't seem to wrap my head around them. From the research that I've done, I understand what they are and how to go about doing them, I just don't understand why anyone would do a short sale. You have to not be able to make your payments and prove your financial hardship for whatever reason it may be- ARM adjusts, unexpected circumstance comes up- in order to be eligible for a short sale right? If you can make your payments however, or have some other assets that the bank could tap, they'll reject you because you're not forced to sell. So #1, if you can't make your payments, you're heading for foreclosure anyway, and if you CAN make them, there's no need for either short sale or foreclosure. From several sources I've learned that a short sale is just as bad for your credit as a foreclosure would be. In either case your credit score can drop anywhere from 200-300 points and you can expect to wait 36-60 months before any lender will give you a rate that makes sense. You will also have this on your credit somewhere from 7-10 years. From what I thought and understood when I first started hearing more and more about this was that the whole point of a short sale was to avoid getting the bad "foreclosure" mark on your credit. I understand the "short sale" mark is not positive, but I didn't think it was so close in negativity as the "foreclosure". So if it's just as bad to have "short sale" show up on your credit, what's the point of doing them then? You only do a short sale if you can't afford the house anymore and can't sell it for what you owe because market value dropped. Isn't that exactly what the bank would shoot to sell it for then if they took it back- market value to minimize as much loss as possible? and wouldn't their loss be just the same if they sold it for what you could? And if "short sale" is not significantly better than "foreclosure" on your credit, then what would be the point of you as the seller putting yourself through the short sale process. I understand that if the bank takes it back and forecloses, you will get a deficiency judgment for the difference and still have to pay it back. You could get out of it by claiming bankruptcy but what good would that do for you? that would just hurt more. I understand it costs the bank a lot of money to take a property back- they have to list it, make repairs- if any- pay closing costs, pay commissions, etc. They would probably rather take a short sale and let the seller do all of that work and save themselves the money but from the sellers point of view, how does it help you in the long run? I understand that in a short sale, the seller can work it out with the bank to waive the deficiency judgment, but then he'll be hit with the 1099 because the bank has to write that deficiency off. So wheres the benefit for the seller to go through the short sale process. So I understand that foreclosures and short sales both suck on your credit if not equally, then the short sale route has no significant benefit over foreclosure. What I need to be able to explain to my client is why he would benefit from wanting to do a short sale vs. just letting it foreclose. There's going to be a mess left over in any case which not one is significantly brighter than the other except that the foreclosure route would save him the effort and headache involved with short sale. So when he asks "should I do a short sale or just let it foreclose, and what is the difference between the two? what's the benefit of going through the short sale?" I want to be able to tell him honestly what the answer is. I've already explained to my client all that I've written above on what each are and how they'll effect him and at this point he just wants to let it foreclose seeing how the effort needed for short sale doesn't produce significant benefits. I felt I didn't feel confident enough in what I knew about both to really let him go off that advice so that is why I'm writing this question. I know short sales are here for a reason but am I missing point for them? If there was no "short sale", you would foreclose because you can't make your payments. Since there is a short sale option however, the bank allows YOU to sell it close to market value- just like they would do if they took it back- and then cut their losses- just like in the foreclosure process. So if you look at it- like the banks do- a short sale is a foreclosure. they're not getting their full loan back like you promised you would when you first took the loan. So what? you try to make amends by selling it for them so that they don't have to repo it and do it themselves. When it comes down to it, it's still the same as a foreclosure except you sell it, not them. And what do you get out of it? It appears nothing more than you would a traditional foreclosure. Someone help me with this. Appreciate it