It seems like a great deal. You owe $10,000 on your credit card tab but the carrier will accept $5,000 to close out the account and retire the debt. So, you’re out of the woods, right? Wrong.

What most consumers don’t realize is that, with forgiven debt, the card company will contact Uncle Sam and declare the unpaid amount as taxable income.

Ironically, the fine print on credit card forgiveness deals comes at a time when card issuers are increasingly desperate to take dimes on the dollar to settle debts as "paid in full." Card lenders feel that, if they get in line first, they might get 50% or 60% of a card loan debt paid out, but if they drag their feet, they’ll get nothing from consumers withy increasingly limited resources.

All told, credit card lenders will write off almost $400 billion in bad card debts over the next four to five years, estimates The Nilson Report, a credit industry newsletter. Nilson says that over the past five years, lender only wrote off $275 billion in unpayable loans.

On the credit card consumer end, the watchword on negotiating “forgiveness loans” is "caution." Few late-paying cardholders may realize it, but the write-off balance – the amount of the unpaid loan that’s forgiven by the card lender – has to be declared as income to the Internal Revenue Service come tax time.

For instance, if you owe Citi (Stock Quote: C) $10,000 on a credit card debt, and the company agrees to accept $6,000 to see the bill paid down in full, you’ll owe taxes on the remaining $4,000 forgiven debt. It’s not like the credit card companies are out to get consumers by reporting the financial end of the card forgiveness deal to the IRS. They’re legally bound to do so.