The timing of your bankruptcy is critical because a discharge only applies to debts â you can't discharge income. If you file for bankruptcy after you receive a 1099-C, what you have at this juncture is income, not a debt that you want to get rid of.The debt went away when the creditor forgave it; at that point, it became income to you.he timing of your bankruptcy is critical because a discharge only applies to debts â you can't discharge income. If you file for bankruptcy after you receive a 1099-C, what you have at this juncture is income, not a debt that you want to get rid of.