cross border tax issues w credit card debt / bankruptcy

[usc-in-canada]

What US and Canadian tax consequences might I incur, if I have to declare US Bankruptcy or just quit making my US Credit Card payments ? I'm a US Citizen moved to Canada (now a Permanent resident) 2 years ago. I have $100,000+ in unsecured US credit card debt (1 LOC and 9 cards). My canadian banking / credit here is seemingly unconnected to this "US debt problem"

I've heard that if I just stop making payments and these US CC companies write off my debts as "bad" that I will get 1099 forms or something that would show the amounts written off as income to me for that year, creating a significant US tax burden. What impact (if any) would such an event trigger on the Canadian side? Am I evaluating my options strictly from a US tax perspective or is there a canadian angle/liability to this ?

I'll skip over the "perfect storm" story of how debt like this came into being. Needless to say, my income now and for the next 2 years (with small kids, medical stuff and new business(es)) is about 20% of its former high-wage-earning self. I'm entirely self employed and paid in US dollars. I'm actually current on all the debt payments at this moment, but will have to make a change immediately. Highest rate is 12% but most are now renogiated at 2-4%. But as I only have $10,000 borrowable capacity left and $2600 monthly minimum payments, I'm just not going to be able to keep paying the minimums.

BTW, My preferred solution path for the situation would be just to pay someone 5% interest-only payments for 36months (I could manage this) until I'm quite confident that my earning power will return to $200,000+ and I could pay the entire amount off during years 3-5. But that "financier" doesn't exist. I've actually called 4-5 of the US well-known debt-consolidation non-profits, as well every one of the card companies. None of them can offer me anything other than a maximum 60-month payoff plan. It is amazing to me that they cannot / will not think outside their boxes. I could be good for this debt and want to be, but the only "highway" they offer is 60-month amortized payback schedule. I've told them I will likely payoff 100% in 2-4 years, but that its the $2600/mo minimums which are unsustainable for the next 24 months. They can't seem to comprehend that if this is all they can offer, they will likely lose their whole principal.

Thoughts on the tax side of things? And/or the BK / no-pay route ?

[nelsona]

Such "income" would be reported in US, but not taxable in canada.

If you are returning to Canada, is it worth even bothering with Bankruptcy? Not t a question for here, but something yo ushould ask these so-called counselling services (many of which are owned by the cardco's).

[usc-in-canada]

Thanks for this clarification. Very helpful. I'm a first timer into Canada. LIkely coming back to US at some point, but not sure when. I might have to call those Cr counseling svcs again indeed. That is one of my key questions. Is there any advantage to me even filing. Or should I just contact all the cards, give them one more chance to make an arrangement I can handle, and then if not, stop paying.