Originally Posted by 300zx
i would just remove it you might be able to use the holes for the new 12-2 wire
This, if you are running new wire I'm assuming you were planning to rip out drywall and make new holes. While you're in there you may as well remove the old wiring and reuse the holes.
If you are fishing in some way or the other, then I would just cut the wire where you can, and tape the ends (treat it as if it was live) but make sure it cannot ever go live - the tape is just a precaution "just in case".