Sometimes creditors may send you a 1099-C for the debt amount forgiven, which the IRS could consider a taxable income.  The IRS provides Form 982 Reduction of Tax Attributes due to Discharge of Indebtedness.  Depending on your assets, this form may exempt you from owing any taxes on the forgiven debt.  According to IRS.gov “A taxpayer is insolvent when his or her total liabilities exceed his or her total assets.  The forgiven debt may be excluded as income under the ‘insolvency’ exclusion.  Normally, a taxpayer is not required to include forgiven debts in income to the extent that the taxpayer is insolvent.”  We recommend speaking with your tax advisor if you receive a 1099-C.