Cancellation of debt paid off

Did New Credit America negotiate a settlement with the banks for less than the $50K owed?  Then did the $25K she paid to NCA include interest and fees?  Come back and tell us when you have the rest of the story.  

<< I would assume that the cancelled debt is not taxable>>

...is something of a scary statement....   because the government will 'assume' that it is taxable. 

Debt consolidation companys negotiate debt forgiveness.... so plan on the income being taxable.

You really don't have to get past "the remaining 25K was transferred."  Banks don't transfer debts.  Sometimes they sell them to third parties, but I doubt that's what happened here.  NCA negotiates settlements.  The banks accepted $25K. They probably would have done that without NCA's involvement, but it's not our job to tell her what she should have done.  With money management skills like that, she wouldn't listen anyway.  

When a 1099c is issued it doesn't automatically cancel the actual debt. The issuer determines whether the debt is cancelled or whether it is still owed. The 1099c indicates that the issuer, for reason, has determined that the debt was uncollectable at the time the 1099c was issued. If the issuer receives payment for the debt, after that time, then it is income to the issuer.