Form 1099-C is a tax form required by the IRS mostly used by creditors such as banks, credit unions, and other financial institutions to report cancellation of debt where debts have been forgiven or canceled. Normally, debts that have been forgiven or cancelled are taxable to the debtor.
You may not include the debt cancelled if you're insolvent (Liabilities are more than assets). If you're insolvent or financially unable to pay your debts, you may need to consult a lawyer.
There are exceptions to not including the form 1099-C on your income: if the person is on bankruptcy proceeding or filed certain bankruptcy.
See, 1099-C, link for more information.
