New Century Mortgage- Carrington Mortgage Service fraud trying to collect after giving a 1099-c cancelation of debt santa ana, California

I fell on hard times in 2008 with a death in the family and a brother on life support. I called New Century Mortgage- Carrington Mortgage Service  for a deferment for 2 months and was assured that since i was never late it would be approved. that was in may 2008 . in june 2008 i recieved a letter with a 1099-c cancelation of debt form for my taxes. when i called them they said that since i could not pay the mortgage at the time they wrote the entire loan off ( it was a second mortgage) i included the 1099-c with my 2008 taxes and paid the penalty. well i just got a call on Oct 23rd 2009 saying that i needed to work out they never wrote off the loan and offered to settle for 50% of the original loan balance it would be done with. but according to the IRS once the company gives you the 1099-c  you no longer owe that debt.  if anyone knows what is true please email me  "no1spec517 at aol.com