For the exemption, you must file a Form 982 with the 1099-C.
This is tax exempt for a Chapter 7 bankruptcy if you can convince the IRS that you were insolvent at the time of the bankruptcy.
The following article discusses this information:
https://turbotax.intuit.com/tax-tips/debt/when-to-use-tax-form-1099-c-for-cancellation-of-debt/L24iT...
I've attached IRS Form 982:
https://www.irs.gov/pub/irs-pdf/f982.pdf
[Edited: 02.19.20.18 4:08 PM EST]
