Want Information About a Student Loan Now in Collections

[keebler123]

My question involves collection proceedings in the State of: California

I have a student loan that went into default. The department of education sent the loan to a company called Diversified Collection services. They sent me a letter stating that I may be eligible for their loan rehabilitation program. It goes on to state that once my loan is rehabilitated: 1) my student loan will be removed from a default status 2) I will no longer be subject to offset on tax refunds or government payments as a result of the this defaulted student loan. Now last year this company took my tax return and I am trying to avoid that this year. Aftering doing research on the internet about this company I have read that they are not completely honest about not taking your taxes. I have also learned of pending lawsuits against this company. I just need some advice about setting up payments. What should I ask for in writing before setting up my payments or even making a payment to protect myself?

[aardvarc]

Dept. of Ed doesn't fool around. They or their assignee (DS in this case) can and will grab every penny of every government issued dollar coming to you (tax returns, incentive rebates, etc.) until the loans are either paid in full or until you have agreed to a new payment schedule and KEPT that schedule for some amount of time (in most cases that I'm aware of, they want 6 to 9 consecutive on time payments before they'll consider your loan no long in "collection status"). They can also garnish your wages to the tune of 15%. However, although their ability to reach into your pockets and take what they can is pretty vast, they are also reasonable to the extent that once you're back on track with a good payment history, the loans come off of default status, which not only can wipe out a lot of the penalty charges on your account (to the tune of a few thousand dollars in some cases), but the loan(s) also start appearing as "paid as agreed" on your credit report AND they become eligible for consolidation or refinancing at better interest rates just like a regular student loan.