My question involves collection proceedings in the State of: Georgia. Hi. I have a pile of student loan nightmares brought on by the DOE. When I consolidated my loans, somehow my grad school loans were missed. The loans went into default and I had to put them into rehab. I finished paying the rehab in Feb. 2009. I fell behind on the payments again as a result of being unemployed. I then was diagnosed with Stage 3c breast cancer and went through a year of intense treatment. As a result of the chemo, I have sustained serious injuries and am currently unable to work and the doctors do not know if I will ever recover. I was contacted by a collection agency for the DOE in November 2011 and was given the option of putting the loans into rehab and was told that I could pay $5.00 per month for 9 months and the loans would come out of default, and my credit would be cleaned up and a new servicer would take over. I made the 9 obligatory payments on time and was assured by the Collection Agency that I made it through the rehab process and would be contacted by the new service provider. The last payment was made in Sept. 2011. I contacted the CA today because I had not heard anything new and was assured that I had finished the rehab process and should be contacted soon. I asked for the number for the DOE and called them directly. I was informed by the DOE that the loans were in fact not rehab'd because I had already put the loans into rehab once before and that the collection agency knew that I did not qualify. I was told that the only option I had was to pay the loans in full. I called the CA back and the lady I spoke with had no idea that I didn't qualify for rehab and simply said she was sorry to hear this.
Is this legal? I made the 9 payments in good faith and have been doing the best I can to try to get back on my feet after surviving a horrific battle with cancer and losing two jobs in 3 years. Do I have any recourse against the collection agency or the DOE for continuing to accept my payments that I thought were being applied toward rehabilitation of my loan?

