1099C lend a hand? If I owe a collection agency 4000 and they offer me to

If I owe a collection agency 4000 and they offer me to settle for 20000, will I hold to do the 1099C?
And how much taxes will I end up paying on it?
Im really confused please help out me.How does this work?

Answers:    If they file a 1099C, you purely need to prove you are insolvent. Meaning, your liability exceed your assets at the time they canceled your debt.

So if the cancel 2000 and your liability are $1000 you would only hold to pay toll on 1000. If your assets are more then the 2000 next you will not have to income any taxes.
no one can answer this interview unless they know your tax bracket!
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