When a debt you owe is discharged (canceled/forgiven) the general rule is that the discharged debt is taxable income to you in the year that the discharge occurs. Note that expiration of the statute of limitations to sue on the debt can result in debt discharge and thus taxable income for you. For a credit card debt, there are two exceptions to that rule. The first is that debts discharged in bankruptcy are not income. Second, the discharged debt is not income to the extent that you were insolvent (your debts exceeded your assets) at the time the discharge occurs. Note that if you avoid having debt included in income under either of these exceptions you might have to make other tax adjustments (reduction in losses carried forward, reduction in basis of assets, etc) to compensate for that. The rules are explained in detail in IRS Publication 4681.

