What to do if I went through a Chapter 7 that was discharged over 2 years ago but I can no longer afford my mortgage payments?

Question Details: t that time I did not reaffirm my 1st or 2nd mortgages, but have continued making the payments on time. I currently have a substantial loss to my income (and will for the foreseeable future) and will no longer be able to afford my payments. I'm wondering if it's better to do a short sale (it's highly unlikely I will get what I owe on the house when I sell it), or to surrender it through a deed in lieu of foreclosure. Will a short sale have tax penalties? Which option is better for my credit?

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