Legal way to recoup damages?

Question

During a break in my home inspector's class, I start talking up with one of my classmates about different RE issues. I mentioned to him about me trying to collect on some damages from a recent move out. He says that he doesn't have that problem anymore. He says that any resident must sign a 1099. If they skip out of owed rent or damages, he just writes it off. This hits the former tenant's credit.

Question: "Is this legal?"

Joe Splitrock · Answer

@Vern M. revenge is for losers with too much free time. Revenge causes you to lose more money through lost time. If you want to get paid, first step is take them to court and get a judgement. Then work to collect the judgement. I only take people to court if there is a chance of collecting, otherwise I move on.

Wayne Brooks · Answer

BS.....you can’t write off “uncollected rent” and any damages get deducted when you pay to have them repaired. And a 1099 doesn’t “hit anyone’s credit” only a judgment would.

Kyle J. · Answer

@Vern M.  I think what your classmate may have been referring to was issuing the tenant a 1099-C form (Cancellation of Debt).  If so, it's an idea that's come up on here before but it's of little/no value in my opinion for a couple reasons.

First, the form is really intended to be used by lending institutions to write off bad debt, not by landlords who operate on a cash basis.  (You never claimed income for the rent you didn't collect so why do you need to write it off?)

Second, some landlords argue that they still like to issue these forms to "stick it to" their previous tenants under the assumption their ex-tenant will have to pay taxes on this forgiven debt.  Even if that were true, how does that help the landlord?  It doesn't.

It definitely wouldn't show up on a tenant's credit report.  There's only two ways to do that.  Get a judgment against the ex-tenant, or report the debt they owe to a collection agency/debt reporting service like Rent Recovery Service or AOA Debt Reporting Service.  You don't even need a judgment to report the debt to services like these, and the debt gets reported on the ex-tenant's credit reports so it serves to warn other landlords about this potentially problematic tenant.  Plus, who knows, some day they may want it off their credit report and decide to pay you off.

Jay Hinrichs · Answer

there is confusing information your getting none of it aligns with reality .  only way to get paid for damages is to sue and get a judgement.. then record the judgement.. and hope the fico picks it up.. collecting on

its hard to collect for damages..  when your tenants basically have no savings.  your left with garnishment.. that can work sometimes.

Chris Shepard · Answer

@Kyle J.

I give a plus one to Kyle for just reporting it to a debt collector and letting them try to collect funds from the tenant who skipped out.

Our property management software does this for us, Appfolio.  All we have to do is click a button and they will process the debt collection.

Legal way to recoup damages?

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