New Jersey Woman's Student Loan Debt Creates Tax Nightmare

"I have a friend that got two 1099 C's for cancellation of student loans (federal) due to total disability due to cancer of her husband in Jan 2011. However, her husband passed away in May 2011…This is just another burden on my friend and I am trying to help her out in all ways possible. She really freaked since the total of the loans were close to $139,000 and she can't afford to count that as income." Source:

And reader T.Long commented on the same story:

"I had student loan forgiven around for $75,000 this loan was in 1994 I have not a full time job since that time. I received 1099c from NElNet. What are the ways I can be exempt from this tax other then being insolvent by using form 982? If do have to use form 982 and claim insolvent what type attachments (do) I have send along with 982."

And another reader named Kim commented:

"My student loans were discharged. I am on Social Security. Do I have to file the 1099-C I received for $62,000? My student loans were discharged due to total disability and I don't file taxes because Social Security is non-taxable….HELP!!!!"

Thompson, who says she would work if she could, is indignant about a policy that forces disabled borrowers like her to trade one type of debt for another.

"There's a reason my student loans were wiped out and I think they should consider it," she insists. "It's just one more thing that I have to worry about."

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