I had about $16k in student loans. I defaulted on the loans, and they got passed to a collection type agency (EOSCCA). The collection agency tacked another $4k onto the loans. I spoke with a representative 6 months ago, and at the time she worked very hard to give me the impression that if I spent 6 months making timely payments at a reasonable rate ($175 a month) they would be able to work with me on forgiving the $4k in fees if I was willing to work towards continuing to pay off the loan.

They called back yesterday, and the story has changed entirely. Now they are saying that they didn't give that impression at all, and I can either a) pay off the $16k and they'll drop the $4k, or b) start paying off the whole thing. They are also saying that the last six months payments weren't working towards rehabilitation at all.

At the start of both conversations (yesterdays, and the one 6 months prior) they said the conversation would be recorded. I have asked for a copy of the previous conversation.

One thing that I feel is very sketchy is when they were verifying my identity they said "Does your Social Security Number end in ####. Is your Birthday Month/Day/Year." That is to say they told me my information, rather than asking me to confirm the information.

My mom suggested I should consider applying for bankruptcy, but from what I can tell from a little googling that wouldn't actually help with student loans. Besides which, a portion of the amount IS my debt. The extra $4k is pretty much BS, but the loan itself is from school.

What are my options? What can I do to aid in my negotiations with this company? Should I hire a lawyer? Is bankruptcy really an option (I don't have a car or house. Hell the most expensive belonging I own is my TV.)

  • Sorry to hear about your ordeal. Was this loan from a traditional university or a trade/vocational school? Jul 13, 2011 at 7:31
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    Telling you your info, rather than asking you to give them the info, is good practice. A scammer after your personal information would typically be asking YOU to provide the info. The fact they already have the info shows you that they are just trying to confirm they are talking with the correct person and not fishing for PII Jul 13, 2011 at 15:15
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    A 'loan shark' is someone who lends you money at 50% interest and breaks your legs if you don't repay. What you have may be more like an ordinary, legitimate 'debt collector'.
    – ChrisW
    Jul 14, 2011 at 2:40
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    25% or 50% either way it seems pretty extreme to me.
    – aslum
    Jul 14, 2011 at 5:38
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    Talk to a lawyer about Misleading or False representation. This is a lawsuit heavy subject and is federally regulated.
    – Anoplexian
    Apr 13, 2016 at 16:57

5 Answers 5


Never speak to a debt collector. Ask them to stop calling you and STOP talking to them. Communicate only via postal mail. Do not react in an emotional way, do not use foul language, etc.

If they call you and attempt to harass or intimidate you, note the date/time, name of the caller and nature of the call. Ask them to cease communications via phone and hang up.

You're missing alot of detail here. You need to understand:

  • The type of student loan that you have.
  • Is it a student loan, or some other loan that you used for school?
  • Who is the lender?
  • Who is calling you, are they a loan servicer or a third party debt collector?

The key to these things is to fully understand the situation you are in and find out what your legal obligations are.

  • Actually if they attempt to intimidate or harass you might be able to collect damages from them (not sure if that's the proper legal term). I had a friend that was able to get some money because the debt collector was "being snarky".
    – Davy8
    Jul 13, 2011 at 21:11
  • It's possible to do that, but not likely. When you talk to people from debt collectors, you need to remember that they do this all day, every day, and they are skilled manipulators. The original poster was already schnookered because a smooth talking collector made an "impression" on him. (An impression that probably locked in those fees!) Jul 14, 2011 at 12:38
  • This is exactly correct. When you communicate with them in writing, be sure to send everything as certified mail with return receipt. Also, keep copies of all papers and save everything. After you tell them on the phone to stop calling you, follow up with a letter restating that you are instructing them to stop calling you. I would also suggest reviewing the text of the Fair Debt Collection Practices Act. It isn't too long, and a working knowledge of it will be helpful. You can read the act at: law.cornell.edu/uscode/text/15/chapter-41/subchapter-V
    – remy
    Jun 17, 2017 at 20:17

@littleadv has said most of what I'd say if they had not gotten here first.

I'd add this much, it's important to understand what debt collectors can and cannot do, because a lot of them will use intimidation and any other technique you can think of to get away with as much as you will let them.

I'd start with this PDF file from the FTC and then start googling for info on your state's regulations.

Also it would be a very very good idea to review the documents you signed (or get a copy) when you took out the loan to see what sort of additional penalties etc you may have already agreed to in the event you default. The fee's the collector is adding in could be of their own creation (making them highly negotiable), or it might be something you already agreed to in advance(leaving you little recourse but to pay them).

Do keep in mind that in many cases debt collectors are ausually llowed at the very least to charge you simple interest of around 10%. On a debt of your size, paid off over several years, that might amount to more than the $4K they are adding. OTOH you can pretty much expect them to try both, tacking on 'fees' and then trying to add interest if the fees are not paid.

Another source of assistance may be the Department of Education Ombudsman:
If you need help with a defaulted student loan, contact the Department of Education's Ombudsman at 877-557-2575 or visit its website at www.fsahelp.ed.gov. But first you must take steps to resolve your loan problem on your own (there is a checklist of required steps on the website), or the Ombudsman will not assist you.

  • I heard via Clark Howard's podcast that the rules surrounding student debt collectors are different than other debt collectors. Confirm / deny?
    – MrChrister
    Aug 24, 2011 at 22:20
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    Almost all of the rules of the Fair Debt Collection Act apply. And there are specific ways to complain about debt collectors where student loans apply. read what this has to say about debt collectors. and this link as well Aug 25, 2011 at 17:02

You should hire a lawyer.

The fact that they told you your personal information shows that they actually had it, and are not imposters, which is a good thing.

The fact that they mislead you means that their intentions are not pure (which is not surprising coming from a collection agency of course).

When dealing with collections (or any matter of significance for that matter), don't rely on their recording of the call, because they can always conveniently lose it. Make sure to write down every single detail discussed, including the date and time of the call, and the ID/name of the person on the other side. If possible - make your own recording (notifying them of it of course). It's too late to record the calls now, but do try to reconstruct as much information as possible to provide to your lawyer to deal with it.

In the end of the day they will either provide you with the recording (and then you might be surprised to hear that what they said was not in fact what you thought they said, and it was just your wishful thinking, it is very possible to be indeed the case), or claim "we lost it" and then it will be a problem to either of you to prove who said what, but they'll have the better hand (having better lawyers) in convincing the court that you're the one trying to avoid paying your debts. That is why proper representation at all stages is important.

As to the bankruptcy - it won't help for student loans, student loans is one of the very few types of debts you can't really run away from. You have to solve this, the sooner the better. Get a professional advice.

For the future (and for the other readers) - you should have gotten the professional advice before defaulting on these loans, and certainly after the first call.

  • The OP said that the loan was issued by the school -- is there a chance that this is a loan not backed by the government, and hence could be discharged in bankruptcy? Jul 13, 2011 at 7:29
  • @Jan- worth checking
    – littleadv
    Jul 13, 2011 at 9:41
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    Good answer, the only thing I would add is that whenever dealing with a collection agency, demand a copy in writing, of any sort of 'agreement' you come to over the phone. This ensures you understand exactly what is being agreed to by both parties, and protects you from 'we never said that' down the road. Jul 13, 2011 at 15:19
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    @stoj, it appears to me that the only thing OP can do on his own is to pay the collectors off, and even then it's not sure the problem will be solved. I'm sure you wouldn't need a lawyer, and probably me neither. But then again - that's why we're answering, not asking.
    – littleadv
    Jul 13, 2011 at 16:55
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    @Jen Unfortunately, it doesn't matter that it is a non-governmental loan. In 2005, the law was changed to exclude ALL student loans, private or federal, from being discharged by bankruptcy. There are currently two bills going through committee to change the law back, and I hope it changed.
    – Chelonian
    Aug 25, 2011 at 18:32

You have not specified what country you are in. That radically changes everything. In case you are in Canada, there's a great blog that covers bankruptcy and student loans, at http://student-loan-bankruptcy.ca/. Fundamentally, in order to discharge government-backed student loans, you must have ceased to be a student for at least seven years prior to filing. Even then, though, the government can object, in which case you will still have to repay some or all of the loan.

More generally, given that the collection agency appears to be operating in bad faith, you'll want to ensure that they send you written documentation of any offer they are extending you. If they refuse to do this, you should assume that they aren't actually offering you anything at all and you will have to pay back the full amount plus interest and penalties.

Note that, in many countries, if you settle the debt (that is, pay anything less than the full amount plus interest and penalties), this will be a black mark on your credit report. In this case, if you repaid the full $16,000 and they forgave the extra $4,000, they would most likely still add a note to your credit report indicating that you did not pay the full amount that you owed, and this will negatively impact your credit rating even beyond your late payments.


I had about $16k in student loans. I defaulted on the loans, and they got > passed to a collection type agency (OSCEOLA).

These guys are as legitimate as a collection agency can be.

One thing that I feel is very sketchy is when they were verifying my identity they said "Does your Social Security Number end in ####. Is your Birthday Month/Day/Year."

That is not sketchy. It would be sketchy for a caller to ask you to give that information; that's a common scheme for identity theft. OSCEOLA are following the rules on this one.

My mom suggested I should consider applying for bankruptcy

Won't help. Student loans can't be discharged in bankruptcy. You have the bankruptcy "reform" act passed during the Bush 43 regime for that.

The loan itself is from school.

What school? Contact them and ask for help. They may have washed their hands of your case when they turned over your file to OSCEOLA. Then again, they may not. It's worth finding out.

Also, name and shame the school. Future applicants should be warned that they will do this.

What can I do to aid in my negotiations with this company?

Don't negotiate on the phone. You've discovered that they won't honor such negotiations. Ask for written communications sent by postal mail. Keep copies of everything, including both sides of the canceled checks you use to make payments (during the six months and in the future).

Keep making the payments you agreed to in the conversation six months ago.

Do not, EVER, ignore a letter from them. Do not, EVER, skip going to court if they send you a summons to appear. They count on people doing this. They can get a default judgement if you don't show up. Then you're well and truly screwed.

What do you want? You want the $4K fee removed. If you want something else, figure out what it is.

Here's what to do:

  • Write them a polite letter explaining what you said here. Recount the conversation you had with their telephone agent where they said they would remove the $4K fee if you made payments. Recount the later conversation.

  • If possible give the dates of both conversations and the names of the both agents.

  • Explain the situation completely. Don't assume the recipient of your letter knows anything about your case.

  • Include evidence that you made payments as agreed during the six months. If you were late or something, don't withhold that.

  • Ask them to remove the extra $4K from your account, and ask for whatever else you want.

  • Send the letter to them with a return receipt requested, or even registered mail. That will prevent them from claiming they didn't get it. And it will show them you're serious.

  • Write a cover letter admitting your default, saying you relied on their negotiation to set things straight, and saying you're dismayed they aren't sticking to their word. The cover letter should ask for help sorting this out.

Send copies of the letter with the cover letter to:

  • Your school's president and their loan office
  • The federal Consumer Financial Protection Bureau.
  • Your representative in the US Congress
  • The state Attorney General in your state.
  • The Massachusetts Attorney General (OSCEOLA is a MA company).

Be sure to mark your letter to OSCEOLA "cc" all these folks, so they know you are asking for help.

It can't hurt to call your congressional representative's office and ask to whom you should send the letter, and then address it by name. This is called Constituent Service, and they take pride in it.

If you send this letter with copies you're letting them know you intend to fight. The collection agency may decide it's not worth the fight to get the $4K and decide to let it go.

Again, if they call to pressure you, say you'd rather communicate in writing, and that they are not to call you by telephone. Then hang up.

Should I hire a lawyer?

Yes, but only if you get a court summons or if you don't get anywhere with this. You can give the lawyer all this paperwork I've suggested here, and it will help her come up to speed on your case. This is the kind of stuff the lawyer would do for you at well over $100 per hour.

Is bankruptcy really an option

Certainly not, unfortunately.

Never forget that student lenders and their collection agencies are dangerous and clever predators. You are their lawful prey. They look at you, lick their chops, and think, "food."

Watch John Oliver's takedown of that industry. https://www.youtube.com/watch?v=hxUAntt1z2c

Good luck and stay safe.

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