"In a 1099c status" would mean they are asserting that the creditor issued an IRS form 1099c, which is a cancellation of debt by the creditor.
If the creditor issued a 1099c, it would have been sent to both you and the IRS, which would have triggered a tax obligation on your part for the cancelled debt if $600 or more at the time it was cancelled. If only $269, there would have been no taxable obligation.
Did you ever receive a 1099c? If not, then they may be making a false representation. I would ask for a copy of any such document as part of a debt verification request, as it would direclty bear on their ability to now obtain verification of any debt.
If it is in fact a cancelled debt, that would argue against, not for, the ability of any party to collect on a debt that was cancelled.
Thus, it puzzles me as to why they would raise the issue of there having been a prior cancellation of the debt they are attempting to collect.
Their phone call triggered ther requirement under FDCPA 809(a) to send dunning notice within 5 days. You have the right to send a DV at any time, either before receipt of dunning notice, or within 30 days after receipt of dunning notice, that will impose an automatic cease collection bar on them until they obtain verification of the debt, and forward that verification to you. While normally not something that would be included in a DV, since they have raised the issue of a 1099c, and that is clearly relevant to any issue of debt verification, I would include in your DV a request for a copy of the asserted 1099c.
As for the threat of legal action, a key factor is whether the SOL on the debt has expired. While expiration of SOL is normally an issue that is raised by the consumer, and is not clearly expired until a court has held as such, there are situations, such as when the debt is so old, that expiration of SOL is clear from the facts of the case.
Particularly if your state SOL statute provides for no reset of the SOL period after the initial date of delinquency.
Additionally, threat of jail over unpaid debt is an express prohibition under the FDCPA, and is in and of itself a clear violation of the FDCPA.
Wage garnishment is not something they can do until they first obtain a judgment, and then file for specific execution of that judgment.
Both of those will entitle you to your day in court before a judge, for which I doubt they would want to expose their shady practices.
The relevance of threats to bring legal action to their collection efforts is that there is a substantial body of case law that holds that if a debt collector has actual knowledge that the SOL has expired on a debt they are attempting to collect, it is a violation of the FDCPA for them to bring, or threaten to bring, legal action.
They are playing with fire if they know that SOL has actually expired.
What is the SOL on debt in your state, and does it have any reset provisions that could possibly make the debt still within SOL?
You appear to have numerous possible violations of the FDCPA looming about.........
Thus, I doubt that they would expose their collection practices to scrutiny of a court. I think its bluster.
