The number of Americans struggling with high debt is increasing, according to the U.S. Federal Reserve. U.S. household debt reached a new record this spring, the central bank said, with the average indebted household owing more than $16,000 on their credit cards.

Seeking debt forgiveness from lenders is one option to try to deal with the burden of high debt. But there is an important tax consequence:

Any amount of cancelled debt is generally taxed as ordinary income.