I am trying to settle some of my bills with my creditors. However, I was told by a friend that I would owe to the IRS for the amount saved in the settlement. Is it so? I am already broke and can't afford to owe taxes. I am trying hard to save as much as possible on my credit card bills so that I can pay down my student loan. If I am being taxed by IRS, I wouldn't be able to pay my other loans. Any suggestions.