Hello, and sorry to hear about your situation.
There are several reasons why this loan is probably no longer valid. First, if they wrote off the loan, and you received a 1099 at the time, then they gave up any further rights toward collection.
Even if that did not happen, it is possible the statute of limitations
on the collection has passed. Under California law, legal action on a debt must begin within four years of the last payment made. So if you have not made a payment in 11 years, it is hard to see how any collector could get passed the statute of limitations problem.
It sounds to me like this is an unethical collection agency trying to collect on a debt that is no longer valid. You may want to consider responding to them that this debt is no longer valid or legally enforceable. You can also demand that they provide you with debt validation. This does not mean they have to prove the statute of limitations does not apply, but hat they are the valid current holder of the debt. Debt validation is very difficult for collectors because they need to provide a ton of detailed information about the debt. For more on this topic, you may find this article helpful:
Also, as for the unpaid debt showing up on your credit report, this should have gone on the report 180 days after your last payment. It then remains for 7 years and then should be taken off. It sounds like you should be able to challenge this and have it removed. For more details, read this:
Bankruptcy should not be necessary in this situation since it sounds like the debt and credit report are already invalid. If you filed a bankruptcy now, that would ruin your credit rating for the next ten years.
The important thing to remember is that if these collectors try to take you to court, it is very important to respond to any legal motions and deny the claims. Otherwise a court could enter a default judgment
against you. Even if you have a valid statute of limitations or other defense, those don't count unless you raise them with the court.
Also, do not agree to make any payments. A new payment revalidates the debt and renews the statute of limitations.
I hope this helps!
Please keep in mind that information in this forum is for informational purposes only. It is not legal advice and does not constitute creation of an attorney client relationship. Before acting on any such information, you are always advised to consult with an attorney licensed to practice in your jurisdiction who can take the time to review all the facts and laws relevant to your situation.