In the sentence at issue:
But when you run away from a situation which/that you should've faced instead, the consequences might be regret, disappointment, sadness, anger and disapproval from your loved ones.
both "which" and "that" work. In this case in which the clause is restrictive (without commas), "which" and "that" are interchangeable.
They are not when the clause is non-restrictive (with commas), in which case only "which" works, for example:
- When you ran away from that situation, which you should've faced instead, the consequences were regret, disappointment, sadness, anger and disapproval from your loved ones.
The relative pronoun functions as the object within the relative clause (you should have faced a situation).
The relative pronoun "where" will only work if it is equivalent to "in which":
- But if you run away from a situation where (= in which) you should have been present instead, the consequences might be, regret, disappointment, sadness, anger and disapproval from your loved ones. (You should have been present IN a certain situation.)