Because you are not at least 65 years old by the end of the year, you apply the 10% threshold to all of your itemized medical costs (which include costs related to your mother). If she claimed them on her own return, she could apply the 7.5% threshold.
When debts are cancelled in bankruptcy cases, the cancelled amount is excluded from gross income. Tax attributes are certain losses, credits, and property basis that must be reduced to the extent of the exclusion.