second mortgage question

[gohornsgo]

Hi. I live in Arizona. I have a home with a first and second mortgage. The first was taken out 8 years ago and the second was taken out three years ago. The second is a line of credit. I used the proceeds to purchase a vehicle. Both loans are with the same credit union in AZ.

I am going to foreclose. I know I can escape tax liability on my first mortgage. How about my second? Also, will the bank come after me and force me to pay the second?

Thanks for your input.

[iv65536]

My understanding of the situation is that the forgiven debt is excluded from adjusted gross income to the extent you are insolvent, and would be excluded if it is discharged in a Title 11 case (keep in mind that Title 11 is the entire bankruptcy code). However, unless you plan to file for bankruptcy very soon, I would strongly advise a discussion with a tax professional.