Legal way to recoup damages?

[Vern M.]

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?"