Short Sale After Bankruptcy?

I had an interesting conversation with a client the other day.  This lady's question was that she was interested in doing a short sale instead of a foreclosure but wasn't sure the point since she and her husband had already gone through a Chapter 7 (liquidation) bankruptcy.

One side of this discussion states - why bother?  In going through a bankruptcy an individual is bringing about many of the things that we work with our clients to avoid via a short sale instead of a foreclosure.  For example, a bankruptcy will have a very negative effect on your credit (although, in many cases the actual bankruptcy will have little effect since the credit has been thoroughly decimated leading up to the bankruptcy) and leads to a negative public record that could be searched by potential landlords, or even potential employers.  With a bankruptcy already on the record is it really worth it to go through the hassle of a short sale? 

Another school of thought is that a short sale will always be better than a foreclosure and one negative public record is better than two negative public records.  Is it worth the time and effort to have, what is most likely, a marginally better credit score and public record?  That all depends on the homeowner in question. 

Personally, I think in many cases it would be worth the effort.  For one, It is likely that the effort from the homeowners won't be too intense since many of the documents needed to be gathered for the bankruptcy are the same documents needed for a short sale.  Banks also tend to approve short sales quickly when they are filed by a homeowner just out of bankruptcy.  Additionally, there is the HAFA program which, if the homeowner qualifies, enables the homeowner to receive up to $3,000 in compensation upon successful completion (many investors can usually guarantee that figure - even if the government approval were to not be granted for whatever reason - including our firm). 

The idea of improving ones credit (even if it is marginal), while making $3,000 for a little bit of work that is already most likely completed doesn't seem too bad.  Obviously, however, individual circumstances will most definitely apply.  I highly recommend discussing the implications with a qualified bankruptcy attorney.