The cancellation of debt must be reported and then if you qualify as insolvent the canceled debt will then become excluded from income. Turbotax will generate Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness to claim the insolvency exclusion. See the attached link for details on how to input the necessary information in TurboTax:
https://ttlc.intuit.com/questions/4308145-i-have-a-1099c-for-a-cancelled-debt-i-want-to-file-for-ins...
