Yes, being unemployed and having unpaid bills is definitely a sign of insolvency. Basically, if you were "insolvent" prior to getting the debt relief that generated the form 1099-C, then the debt would be excluded from income using the form 982.
Here is a link to the IRS discussion of "insolvency". You can also link to the instructions for form 982 from there, and scroll down to the instructions for line 1b.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
