Please see the IRS Publication 908 Bankruptcy Tax Guide - http://www.irs.gov/pub/irs-pdf/p908.pdf - with example of the form 982 on the last page.
If you are not insolvent - you may not exclude forgiven amount from your taxable income.
If additional - you may report the casualty and theft loss on your tax return. Generally - you need to identify the fair market value of the property before it was damaged and the fair market value of the property after it was damaged. It the property was a total loss - that value would be zero.
The difference would be your casualty loss.
You may find more details and reporting examples in the IRS publication 547 - http://www.irs.gov/pub/irs-pdf/p547.pdf
Let me know if any clarification is needed.
I believe that the statute of limitation has been expired (it is usually three years).
But you may consult with the attorney in your area - you may use Massachusetts Bar Lawyer Referral Service - http://www.massbar.org/for-the-public/need-a-lawyer to locate an attorney.
Most attorneys will provide first free consultation - just ask.