| I am curious to know whether this debt settlement related to your home mortgage, because if it was then you may qualify for debt forgiveness relief that was passed by Congress. If it was credit card debt that was forgiven, then you are out of luck, the 1099-C is reportable as other income and subject to your ordinary tax rate.
The IRS has established certain conditions and rules where they an exception applies and early withdrawal penalty from an IRA is waived. Unfortunately, I don't think you meet these exceptions and would not be able to avoid penalties from your early withdrawal from your IRA.
With your tax bill estimated at over $20,000 I think you should definitely visit with a Tax professional or CPA, and then let thm advise you your best course of action and whether or not you should meet a tax debt settlement company or not! | 
