Be careful about what you do in the US.
Most of us who read/watch the news know about the fallout in the housing market. As more and more people find it difficult to meet the monthly payments, they wish to bailout. And usually, they do this by selling their house for less that what it is worth and getting their debts canceled. Well, sounds reasonable, does it not? But there is a catch. The IRS will send you a tax bill on the amount of debt canceled since this is treated as an income. (Form 1099). On the other hand, if the debt were to be canceled after declaring bankruptcy, this will not happen.
Well - the first thought that came to my mind was - this system is really screwed. I mean - people who cannot make the payments are the ones who sell their houses and move on. And it is not like everyone gets the whole amount back. But then, thankfully you can appeal against this and prove that you are insolvent and win.
Read this article to know more.
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