We've talked about how some people are just walking away from mortgages due to low home values and tough economic times. However, it's not always simple or painless.
If your bank forecloses, your troubles don't end. Your credit may suffer for years to come, but most people aren't worried about the distant future. A more pressing problem can be taxes and deficiency judgments. You may owe taxes on 'forgiven debts', and the bank might bring legal action against you to try and collect what they couldn't collect in foreclosure.
To find out more about these pitfalls and whether or not they're a risk, see:
Yes, foreclosure is almost never the solution. But if it is the Bank which is in bankrupcy, there is also tax implications.