This is absolutely true and good to keep in mind. If you do a bankruptcy, those discharged debts are not taxable, as that is not considered a debt forgiveness. (At least, I'm about 80% sure of that.) However any reduction in your debt granted you by a creditor can sure be considered as income. In my state, creditors are required to tell you that now, but they do it in such a way that you'ld have a hard time even knowing that's what they are saying.

An option can be to simply default and let the statute of limitations run out. The result is pretty much the same as having done a bankruptcy. And when that time interval runs out, the credit companies will be begging you to take out more credit cards. (Of course, this is no help with student loan debt. No statute of limitations applies.)

A friend of mine who defaulted on $12,000 worth of credit card debt, back in 2007, is now getting offers of more cards. He just accepted a card with a limit of $1500 that has an interest rate on purchases of 11.7%. (Pretty decent terms.) It makes me wonder what the heck these banks are doing. I have told him not to ever lie on an application, as that can be construed as fraud. There is something wrong with this whole scenario. Banks are deliberately offering credit to people whose checkable background shows them to not be credit worthy. I get offers and I'm not credit worthy.

Something more is going on than meets the eye. This is a case of the bank knowingly setting up assets in "accounts receivable" that it knows are very, very shaky. I'm wondering if they are basically selling that debt on the market to stupid investors, but I can't believe that the market is that stupid.

This is why I have great interest in anything that Senator Elizabeth Warren has to say. She's the only one out there, front and center, telling us that these banks are still pulling crap.

She also has a lot to say about the crime of the huge student debt load that this nation's young are carrying. Plenty of other senators and congressmen know what she knows, but they don't talk about it. In the case of the student loan debt, the colleges are as dirty as the banks, IMO. People used to joke about mail order degrees being offered by disreputable sources. Well, if you show you show up with the funds to attend, a lot of supposedly respectable colleges are basically selling degrees. (I see students who are not really up to a the university programs that they are in. As long as they show up for classes, a lot a badly written papers will be allowed to slide through.) And they've got a cadre of experts on campus to help you get student loans.