Stupidist move imaginable.
The IRS and state tax guys give you an imputed value of the money you pulled out over the years over the value of the money you put in.
You then receive tax bill on this difference, plus interest, plus penalties.
Immune to bankruptcy relief as well I might add.
In any case, you need to consult a very, very knowledgable tax/bankruptcy attorney before you do anything.
That being said, God Speed in the cursed Era of The Obama Regime.
Yes, that is true as well. The value of the “forgone” loan is an imputed income to those who default.
Same thing applies in a short sale or mortgage reduction.
As you say, people doing a ruthless default had better consult an attorney first.