Does Massachusetts allow the cancellation of debt to be excluded from income tax due to a foreclosure?

Unfortunately, Massaschusetts Dept of Revenue did not and does not Adopt this provision of the Federal Mortgage Forgiveness Debt Relief Act, irrespective of its extension at the Federal level.

See attached statement of DOR

Massachusetts follows IRC Sec. 108 as it existed in 2005.  There are some provisions that could enable a taxpayer to exempt or exclude debt cancellation income.  Research thoroughly and see IRS Form 982 and IRS Pub. 908.  Scruffy's answer covers one limited aspect and is not a thorough or completely correct answer.

See 2017 UPDATE - not sure where you @atteckus drew your information, but MASS DOR Instructions are clear on this!

According to the 2017 Instructions for Form 1 Massachusetts Income Tax:https://www.mass.gov/files/documents/2017/12/06/dor-2017-inc-form-1-inst.pdf

• Page 5:  What Is Gross Income? Massachusetts gross income includes the  following:
• ? forgiveness of debt;
• ? mortgage forgiveness;
• Page 19 Instructions for Schedule X Line 4: 
•  Fees and Other 5.1% Income The following items should be reported on line 4 of Schedule X.  
• ? Forgiveness of debt and mortgage forgiveness. 

I foreclosed on my main home in 2012 and filed bankruptcy. I just received a 1099C dated 3/13/2019 and live in MA. Why did I receive this now this many years later? Why am I obligated to pay 5% Mass Tax on this now? Is there anyway to get around this? 

I suggest you contact the Low Income Taxpayers Clinic at Greater Boston Legal Services. There is a tax group there that will be able to provide free expert assistance on your particular situation.