1099-C

The 1099c should be for the amount of the forgiven debt only.

Original amount of the debt minus the settlement amount.

If the original amount of the debt was 6280.32 and you paid 1330.00, the correct amount on the 1099 should be 4950.32.

Exactly right--and I would call the company that issued this to you and ask that they reissue it. There's still time to do that.

How do you go about claiming insolvency in regards to a 1099-c?

You have to write on a piece of paper (there is no form) two columns. left column write everything you own; right column everything you owe. If the bottom line is you owe more than you own, then you are insolvent. Understand that this does not get you out of the tax liability, but does postpone paying tax on the amount indicated on your 1099-c. You'll have to set up what is called a "tax attribute" that will be something that you deem worth the same amount or more than the amount on the 1099-c. This you will set up on IRS for 982. When you sell whatever it is that you set up to cover your tax debt, then you would claim the offset income at that time. It could be decades from now depending upon what you originally set up. I used an automobile and when I sell it, I'll have to submit that transaction on a schedule D. This is a complicated issue. Read up on IRS publications and call the IRS help line.

on the insolvency you are saying you dont get out of the tax liability at all?

You get out of it. As long as you are insolvent for the total forgiven amount.