Legal Question in Credit and Debt Law in Texas
Settlement or Not?
I have a question. I recieved a letter from a collections agency that wants to settle the $18,031.78 debt I have with them for $3606.66. The letter that they sent said that this was an offer for a settlement and there would be no further outstanding obligations pretaining to this account. I have looking on several websites trying to find out if this means that I will not receive a 1099 form from them at the end of the year stating that I made this money when I didn't. I did find on several websites that if the amount is over $600 that you will receice a 1099 from the IRS. They are threatning to sue me if the matter is not settled. I am the soul provider for eight people, and cannot afford to have my wages garnished. Can they do that? I am wondering if someone can give me any advice on this matter. I have been making payments on this debt for 5 years and I am afraid of what the outcome will be. If I settle will I still recieve a 1099? If I don't settle, can they still sue me even though I am making payments? Is it possible that my wages be garnished? What if I were to put the debt on my consumer credit, do they tack on all of the interest?
1 Answer from Attorneys
Re: Settlement or Not?
If you settle, the creditor may send you a 1099 for the amount saved, that is, for the forgiveness of debt. It will be considered income. That is the option of the creditor - some will report it, some won't.
In Texas, private creditors cannot garnish wages.
If you are not making the monthly minimum payment, the creditor can sue you. If you put it on your credit card, the charge will probably include all interest accrued until the date of the charge. Once the creditor is paid by the credit card company, there is no additional interest charged. Of course, then you have to worry about the interest that your credit card company charges you.
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