1099-C

Creditors have a lot of wiggle room about when to report canceled income to the IRS. Statutes of limitations vary by state and by type of debt, but creditors are not required to file a 1099-C at that time since they can continue to try to collect on a debt indefinitely. Consumer advocates argue that under IRS guidelines, creditors should send a 1099-C three years after there has been no activity on the debt, so maybe that is why your client got a 1099-C 3 years after any collection activity. The first step should be to contact the creditor to ensure the debt cancellation is accurate and not a mistake, of which there are many.  If incorrect, they can issue an amendment.

Assuming correct, then it is debt cancellation income. If your client did not already report the cancelled debt as income in 2016 (highly unlikely), then you will need to report on the 2019 return to correspond with the 1099-C filed. You can try to qualify for an exception like insolvency and complete 982.