So I'll try to make a long story short. My father got sick lost everything finally sold his business and had no bank account, so he put the money in my account till he got his. Turns out the bank had just acquired my student loan debt and decided to take the money. I called told them the story,and showed proof of my situation and they said they'll only take X amount and give back the rest. I said okay without even thinking. We had medical bills to pay. Now I'm on the hook for 25K. I read on the IRS website say's this:

"Canceled Debt that Qualifies for EXCEPTION to Inclusion in Gross Income:
Amounts specifically excluded from income by law such as gifts or bequests
Cancellation of certain qualified student loans
Canceled debt, that if paid by a cash basis taxpayer, would be deductible
A qualified purchase price reduction given by a seller
Any Pay-for-Performance Success Payments that reduce the principal balance of your home mortgage under the Home Affordable Modification Program"

Any of this apply to me? I live with my sister and bro in law as their nanny and they pay for everything. What money I do get is from odd jobs that provides income that I don't have to declare. They are going to try to claim me as qualified dependent. As of right now before anyone has done taxes; turbo tax say's I owe Feds 3444 and state of CA 603. I technically made only 375.00 last year with 200 in food stamps.
Any help is appreciated.

“We had medical bills to pay. “Any of this apply to me?”==== The consequences of default can be severe: The entire unpaid balance of your loan and any interest is immediately due and payable.You lose eligibility for deferment, forbearance, and repayment plans.You lose eligibility for additional federal student aid.Your loan account is assigned to a collection agency. Your student loan debt will increase because of the late fees, additional interest, court costs, collection fees, attorney’s fees, and any other costs associated with the collection processor etc.In certain situations, you can have your federal student loan forgiven, canceled, or discharged. Forgiveness, cancellation, and discharge of your loan means that you are no longer expected to repay your loan. After reviewing the conditions, if you think you qualify, contact your loan servicer. If you have a Federal Perkins Loan, you must apply to the school that made the loan or contact the loan servicer the school has designated. Generally, student loans are not discharged in a Chapter 7 bankruptcy case. Presently, the only ground for discharge under the bankruptcy code is that the repayment of the loan "will impose an undue hardship on the debtor and the debtor's dependents." Unfortunately, it is extremely difficult and rare to meet the criteria for an "undue hardship" discharge.For total and permanent disability exemption, this type of discharge applies to FFELs, Direct Loan and Perkins Loan. The borrower must be found totally and completely disabled to be eligible for this type of discharge, and must provide documentation from a physician that they are unable to work because of an illness or injury that is expected to continue indefinitely or result in death. This type of discharge is not available to the borrower if the condition existed at the time the loan was made. However, under new rules, pre-existing conditions may qualify if the borrower suffered substantial deterioration after the loan was granted.

Ifyour loans are discharged, they will be assigned to the U.S. Department of Education before your debt is permanently cancelled. To cancel or discharge your loan, you need to first find out who is currently holding your loan. Check the collection notices that you have been receiving. Additionally you may call the Federal Student Aid Information Center at 1-800-433-3243 (1-800-04-FED-AID). If the guarantor agency has the loan you should deal with it. If the Department of Education is holding the loan, deal directly with the Department. If the Department has referred your loan to a collection agency, inform the agency in writing that you are contesting the debt by filing for a discharge of the Department of Education. If you defaulted on a Perkins Loan, it may still be held by your college and you should contact it for more information If you qualify for a complete discharge of your loan, you are no longer obligated to make loan payments. Depending on the type of loan discharge program for which you may be eligible, the U.S. Department of Education may be required to refund to you some or all of the payments you made on the loan. In addition, any adverse credit record related to a default might be deleted, and no tax refund offset or wage garnishment will take place to collect on the discharged loan. Each individual state has their own requirements when it comes to the treatment of a student loan. For instance, the State of Pennsylvania does not require you to pay income taxes on a discharged student loan or any other loan as they do not consider loan forgiveness as personal income. For what your individual state requires of a discharged student loan, you will need to go to your local state's website and search "student loan discharge."
The government has powerful tools to use against borrowers who don't make student loan payments. The IRS can intercept any income tax refund you may be entitled to until your student loans are paid in full. This is one of the most popular methods of collecting on defaulted loans.
.The law lets you eliminate your student loans if paying them creates an "undue hardship" for you and your family. You must prove to the bankruptcy court that you're only earning enough to pay for a "minimal standard of living." This usually means you can’t afford cable, Internet or a cell phone - even without paying your student loans. You also have to prove that your finances aren't likely to get better. It helps if you were able to make at least a few payments. This shows the court that you tried. With the Federal tax code the way it is, there is always some confusion as to whether or not you may have to pay income taxes on a discharged student loan.



“ I live with my sister and bro in law as their nanny and they pay for everything. What money I do get is from odd jobs that provides income that I don't have to declare. They are going to try to claim me as qualified dependent.”=======As long as they meet the requirements , they can claim you as their dependent as a qualifying child or a qualifying relative on their return.