Box 5 of that form has absolutely nothing to do with your tax liability on this canceled debt. That is just for informational purposes to indicate the type of loan that it was. In other words, when it says you were not liable for the debt, that means that the lender had no collateral or other recourse where he could come after you personally to collect the amount you owed. It was simply an unsecured loan.
But anytime that a lender gives you money or advances credit to you, and you do not pay back the full amount of that loan or the credit that was extended, then the IRS views that the same as if you had income. Someone gave you the use of a credit card or a loan, and you used that loan or credit card to make purchases. But then you did not pay back the full amount. That is why it is viewed in the same manner as if you had income. Someone gave you money which you did not repay.
You cannot deduct the interest or any of the other fees that accrued on the account, because you agreed to pay those when you signed up for the credit card or the loan.
The form 982 is what you would use if you want to claim insolvency or if you have the debts discharged through bankruptcy. But you cannot just fill out form 982 without one of those two things applying to your situation.
I really would love to be able to help you here, but unfortunately there is just no way around this situation other than showing you were insolvent or by having the debts discharged through bankruptcy. With the economy being the way it is right now, we have had many people come through this forum with similar problems, so I know that there are a lot of people going through this same dilemma right now. And unfortunately there just are no other choices here.