Yikes. Nope, I live in Canada and I had a few tens of thousands in debt forgiven. Definitely didn't have to pay taxes on it. That would be absolutely crazy and would have driven me to bankruptcy!
Yep. In my case we were overjoyed having finally worked out a deal with the bank, only to discover that now I was in debt to the IRS instead of the bank :'(
It sure feels like your government is shitting on you during an already tough situation.
So the idea is the bank gave you a loan then forgave it, so it’s now income? That’s a big leap in logic and sounds evil considering you never consider that when getting a loan, you only expect the internet to accrue.
It is income. Someone gave you money. Otherwise, why wouldn’t a company “loan” you a higher salary and then just “forgive” the debt? Or, you could set up a company to loan yourself money — the company deducts the “loss” and you don’t pay taxes on the gain.
The principal is presumably income, however the interest or fees should not be. The IRS will even occasionally cancel debt that’s mostly fines and interest without considering it income.