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Lately, as everyone else is more than likely realizing as well, half of my business are Short Sales. It's sad that this has come to pass for so many people who have worked so hard to get into their homes, just to have to sell it at a loss! But it is what it is and we can get through this together.
So, you have to start over... Start a new. It's not your fault. So stop feeling guilty. If it was all your fault, why would the government step in and implement the Mortgage Debt Relief Act through your lender using a 1099-C, Cancellation of Debt? Of course, I would always refer you to your tax professional, but the bottom line is, there's help out there for you! You just have to ask for it!