I'm probably being wildly optimistic here, but does the "income" from cancellation of debt reported to the IRS on the 1099-C have to be reported as income for state income taxes? I'm having trouble finding a clear answer. I live in NJ.
Thanks,
Jennifer

Yes, you must include the canceled amount in your income for both the federal return and the state return. On federal return report the canceled amount on Form 1040, line 21 (Other Income).