I would have to pay taxes on the amount that was forgiven

The IRS does treat forgiven debt as income, so technically you do have to report it. But there is a form you can file to claim hardship. (I forget the number off hand, but you can probably find it on www.irs.gov) I have no idea how high a standard IRS sets in practice to determine what is a "hardship." Perhaps someone else can answer from experience.

I guess it's Form 1099?

If there's a 1099, that would be issued by the credit card company itself, probably as a 1099-MISC. But that is only evidence of income. I was referring to a form jen would complete to claim a hardship and avoid taxes. I believe it's form 982, but I am not 100% certain.

I believe it is form 982 also. You can do a search online for "IRS form to file insolvency". If you have no assets available to you then you are insolvent. You just have to fill out the form and send it in with your taxes.

I am so happy you settle an account. I am so looking forward to settling an account to. Did you do this on your own or with a settlement company?

What about all the interest I paid? Is that subtracted from the "income"?

the form is 982. and you only need to claim it if the debt that was forgiven is more than 600.00 and if it is then request to fill out 982 and chances are you will not have to pay it. i sure wish i new about 982 it would have saved me about 800.00 that i owed to the irs. i didnt know about this form and just paid it.