When a short sale occurs can they sue for the balance and if they can what is the procedure for paying a judgement

Usually they won't sue you because they have to know that you obviously do not have the $$ to pay. Typically what they do is file a tax return on your behalf at the end of the year. The return will show that you made a profit of how ever many dollars. The IRS can then set you up to make payments. The mortgage companies don't really want to try and collect because it is too much trouble. The IRS knows they WILL collect someway or else you could serve time in jail for non-payment of taxes. They will let you make payments.