Debt Forgiveness Act Expiration Ramifications!

[GAOinLV]

So with this act possibly (likely?) expiring at the end of the year, my understanding is that the only ramification to people doing a strategic (or non-strategic) walk would be the tax implication on the portion of the debt that is "forgiven." My understanding is also that you aren't liable for the taxes if you are insolvent. However, what I see and hear going on, at least here in Las Vegas, is that all of the realtor/lawyer types are on TV warning people that they have to hurry and short sell right now before the end of the year--or the sky is going to fall. A friend of my daughter actually went to a lawyer and what she came away with was that if they don't short sell their home (which is currently WAY upsidedown and in default as they were going to let it go into foreclosure) before the end of the year, they will be LIABLE and have to PAY the difference between what the house sells for and what their mortgage is. Not pay TAXES on it, but actually PAY the difference. Now these people are not high earners, they went bankrupt a few years ago, and they live paycheck to paycheck (the wife is a stay-at-home mom and so they have only one income). They are currently frantic to get their short sale approved in order to avoid certain financial ruin if it isn't approved by the end of the year.
I don't figure she's going to believe ME over a lawyer, and I'm assuming (hoping I guess) that they just misunderstood the lawyer. But from the tone of the TV ads I'm seeing, I'm thinking that people are being mislead. Any comments or had anybody else had any similar experiences?

[Dad_co.]

My tax guy feels it would "likely" be extended into 2015 and be voted on at the 12th hour and employed into a "vote garnering" tool for the upcoming election for either primary party... we'll see. As I understand it the COD (cancelation of debt)after the sale of the property is calculated for your tax return (form 1099) is the amount forgiven= the fair market value (not owed amount)-auction sold amount. This is a hot topic, especially for strategic defaulters.

[FontanaFire]

The BILL to extend the Tax Relief Act was approved by the Senate Finance Committee and it just needs President's signature. Which it will get, of course, especially since it's within a whole series of "middle class" tax cuts. As of Aug. 2, 2012.

http://www.finance.senate.gov/newsroom/chairman/release/?id=e3290a69-8fa4-4a6d-8c3a-756ea03a4224

[Ready2Run]

The BILL to extend the Tax Relief Act was approved by the Senate Finance Committee and it just needs President's signature. Which it will get, of course, especially since it's within a whole series of "middle class" tax cuts. As of Aug. 2, 2012.

http://www.finance.senate.gov/newsroom/chairman/release/?id=e3290a69-8fa4-4a6d-8c3a-756ea03a4224

I thought it had to get house approval first.(?)