tax liability

What is the name of your state? texas we took out a loan and made settlements with credit card companies to pay them off now we find out that this is income how can this be ? if items bought were taxed allready how can it be taxed again? and is there any counter action we can do to not pay a tax on this amount? the amount is approximately 18000.00 dollars and this is more than i make all year. thank you for any assistance that can be made. don mccon

[abezon]

Who told you a loan is income?? It's not.

Are the credit companies saying that they settled the debt for 40% and are claiming that you have to pay taxes on the 60%they didn't collect? If so, you'll have to pay taxes on it unless the debt was forgiven while you were insolvent. Insolvent = debts>assets, bills>income. If the companies were willing to take less than full payment, you were probably insolvent at that time.