If you have a personal loan that is canceled, it means that the debt owed is eliminated or forgiven in finance parlance relieving the borrower of obligation to repay it. If this happens to you, you most likely will have to count the amount into your gross income for the year and claim it on your next year's tax filing. The reason for this is that any personal loan that is forgiven automatically becomes a cancellation of debt income, except for in a few rare situations. If you have a personal loan forgiven by a lender, you should be receiving a 1099-c filing sometime early in the following year so you can properly claim the amount forgiven on your income tax filing. There are a few rare situations where you may not have to claim the forgiven loan on your following year's income tax filing. First, if the personal loan is forgiven by a qualifying institute, typically a public institution, and they have permission to forgive your personal loan without the tax liability. Even if you work for a public institution, like a university, school district, federal agency, or NGO, and you have your personal loan forgiven by the institution, it does not automatically mean that you do not have to claim it on your following year's income tax filing. Special permissions need to be granted in order to allow you to exempt the forgiven loan amount from your gross total income for that tax year. If you have a personal loan forgiven, you should always consult with your tax consultant when you are filing your income taxes to help clarify whether or not the forgiven loan should be included in your gross total income for the year.