My property is currently underwater and I am considering short sale/foreclosure. If I short sell, I will be subject to taxes. It is my understanding that a Chapter 7 would avoid such liabilities. I have assets that are outside the allowable CA exemptions. Other than my mortgage, my debts are about $1,000 in credit cards. I know that the $1,000 can be paid from my nonexempt assets, but only in the amount that I owe ($1,000). My question is if I file Ch 7 BK, can the trustee take my nonexempt assets to pay the tax liabilities or the unsecured portion of my mortgage if I short sell of go through foreclosure?