1099's don't create tax liability, the action they represent do.

If a lender forgives any part of the debt, the forgiven part is taxable, though you are given a pass if you're otherwise insolvent.
Judgement proof isn't a defined concept, it just means that you don't have any assets easily accessible by the judgment creditor.
Insolvency for avoiding the taxable aspect of the forgiveness is well defined. It involves all your assets, not just those easily accessed by a judgment. (You can easily find the form for computing this on the IRS website).