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Can a credit collect the same debt it issued a 1099c on in Texas?

Fort Worth, TX |

My son was incarcerated for a year and defaulted on several credit cards as a result. Chase sent a 1099C to the IRS in 09 and we filed his income tax, declaring him indigent. Now he's out and trying to settle things and Chase is still reporting the debt plus considerable interest and their reps say that he still owes it. This is not a debt collection- Chase still owns the original debt.

I meant 'this is not a debt collection AGENCY-

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Attorney answers 1

Posted

A creditor can seek to collect on a debt even if the creditor has charged off the debt or otherwise declared that it was a bad debt. The only way to discharge the debt is for your son to file for Chapter 7 bankruptcy, and wipe out all his previous debts.

Alternatively, your son may be able to negotiate a payment plan with each of the creditors. In the payment plan, your son would pay off the agreed amount over time. But, make sure that the creditors agree in writing that if the payment plan is paid as agreed, the creditor will withdraw any negative credit information from the credit reporting agencies.

Please note that it appears that your son may be judgment proof. That means that the creditors cannot seize any of his property as it all may be exempt under Texas law. For a list of all the property that your son can protect from even a creditor with a judgment, please review my legal guide:

Avvo legal guide on assets a debtor can protect from a creditor:
http://www.avvo.com/legal-guides/ugc/what-property-can-i-protect-from-judgment-creditor-seizure-in-texas

Also, there is a four year statute of limitations for debt collection in Texas. So, if the debts are over four years old, your son would have an affirmative defense.

Good luck.

Hope this helps. If you think this post was helpful, please check the thumbs up (helpful) tab below and/or designate my answer as the best answer. Thanks.

Asker

Posted

He has negotiated a settlement with a few of them but Chase has continued to add finance charges on it since the filing and it's at a very large amount now. He will have to take a distribution from his 401K to settle this one. Is that preferable to bankruptcy? And if he pays that, can he deduct it from the other 1099c's that will be filed this year on the other debts.?

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