<prompt> Human: Back in the early 2000s my fiancee went to an out of state college and her parents paid for all of it with private Loans I dont really know the details of the loan that totaled more than 100kShe always just thought it was taken care of since her parents kept her in the dark about it.Fast forward to 2014 when we met, she got a letter in the mail saying she defaulted on this giant loan and to prepare for the credit score assblasting. Until today we havent heard anything else about it since then.So now that we have sufficiently freaked out... any advice on negotiating with the Irs or getting out of this situation alive?  <response>: As others have said, if you default on a loan it shows up as income on a 1099-C. The question though is, why is it showing up as your wifes income rather than her parents if her parents took out the loan? If her parents did in fact take out the loan, the debt would be theirs and the default would show up on their credit report and they would be issued the 1099-C, not your wife. Since your wife took the hit on her credit and the 1099-C was issued to her it appears that she took out the loan, not her parents. 