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Hello R. Klein.
Thank you for your response. I would like you to clarify one point before I accept the answer.
Pertaining to the tax consequences, is what you described regarding the two conditions only tied to the infamous "home owners debt foregiveness act" or are these two conditions in place regardless? Is it critical to get this debt off the books this calendar year or while the act is still in place? What are the implications after the act goes away at the end of this calendar year.
I can say that the foreclosed property is 1) my PRIMARY residence and foreclosure will occur because the value is much lower than what is owed. However, for 2) what is considered net worth - liquid assets/monies and/or retirement accounts (401K, RothIRAs, etc.) or bothe?