As your home is already in the auction process, I am afraid that it is too late to really negotiate a short sale or deed in lieu unless the lender is willing to postpone the auction and you would have to negotiate that with them. If they will not agree to negotiate the short sale or deed in lieu, you let it go to foreclosure and they can if they choose sue you for the deficiency judgment amount, but this means them coming to Canada to get personal jurisdiction over you to enforce any judgment against you. They are not likely to go through that trouble and having a debt in the US or a judgment against you in the US does not bar entry to the US nor is it cause for arrest here.

In a short sale they will issue you a 1099, but there are tax credits available to write off any short sale amount for those in foreclosure, so there are very few people who actually end up paying taxes on any amount forgiven in the short sale process or foreclosure process. See: Mortgage Forgiveness Debt Relief Act.

If you have no real assets to speak of, likely it is best for you to let the foreclosure proceed unless they would give you the deed in lieu (which is where they forgive any balances). In the unlikely event they seek to pursue you in Canada, you would then be able to seek to qualify for bankruptcy in Canada to seek to extinguish that debt and your other unsecured debts.

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Nevada has a 6 year statute of limitations to sue you for breach of contract. It is unlikely they will pursue you into Canada, since the cost to them increases to do so, but in the event they do and if they get a judgment there then they can seek to enforce that judgment in accordance with the Canadian laws (I am a US attorney, so I am not familiar enough with their garnishment process) and you can seek then to file bankruptcy to get the judgment extinguished if you qualify under the Canadian bankruptcy law.