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.