She should certainly not sign it. If it's false, then she's committed perjury. There is no upside to her and plenty of downside. The lender is looking for a document that they can take into court in case she declares bankruptcy or they decide to take her to court on the loan.

She immediately get in touch with the National Foundation for Credit Counseling (nfcc.org) and talk to a credit counselor to get some good advice.

I'm sure you've heard this before, but I'd consult an attorney. I realize you are strapped for cash right now, but in this case a one time consultation could be less expensive than than alternative. This sounds like a very questionable pressure tactic on the bill collector's part. They are already contracted to collect a set amount per month. Your having been faithful with your payments should not result in their being able to just change the rules this way.

DO NOT Sign! She should NEVER perjure herself just to make the phone calls stop. Keep making payments on time, and they have NO legal recourse.

Why not get a hardship deferral for the medical condition? Gov. backed student loans allow for this. Then she doesn't have to pay until she can.

1. Don't sign it.

2. Send the cease and desist, registered mail.

3. After #2, ignore them until they send you an offer in writing that you can afford, or you are served notice that they are going to court for a judgement.

4. If you are served notice of court action, not just a threat to do so but actual notice, you will need a lawyer. Don't ignore any notice of actual court action. If you can't afford a lawyer, contact the legal aid office in your community.

My guess is they will eventually settle for a monthly amount you can afford.

She's being pressured to sign a document with threats of what? More phone calls? Ouuuu. SCARY!

Although it definately sounds there is shadiness going on here, the threat of my phone ringing doesn't carry a lot of weight. Also, following Ben's advice should end those SCARY phone calls anyway.

If I were in your shoes I would probably tell them to go pound sand. Aside from what Ben suggested, you should let them know that you plan to pay them back once you are able. Don't sign anything unless you like the arrangement and NEVER give them electronic access to your checking account.

If they don't like that then invite them to sue you in court. If you're as broke as you say you are then there's no more money to go around, kind of like squeezing water out of a dried up sponge.

Some of these debt collectors are pure evil but at the end of the day, the debt is still valid and you should make an honest effort to pay them back. You still have the means to pay this debt off so I wouldn't even consider bankruptcy (not that it was even mentioned).

Buckle down, cut your lifestyle down to nothing: no eating out, no buying useless junk, pack your own lunch and eat at home (rice & beans), no vacations, cut the cable bill, yadda yadda yadda... you get the picture.

Best of luck.

@sleze69: She is getting phone calls at her PLACE OF BUSINESS. Do you realize how unprofessional that looks to her BOSSES that provide her her paycheck? The sarcasm really is not needed.

@nightsky: Here is the problem with those deferrals: they capitalize the interest on the loan and turn it into principle. So while you have some breathing room by deferring payments, you hose your future by having to pay even more just by deferring. Its worse than credit card interest!

[budhibbs.com]

Couple notes - NCO can't be trusted - and Student loans never ever go away. The usual avoidance tricks do not work on that type of loan.

From the way this reads, NCO is the original creditor and thus not a 3rd Party Debt collector to whom the FDCPA applies.

Agreed that she should not sign it. Signing a document agreeing to do something she can't do will only put her in a bigger bag of hurt. She's already in arrears; signing will just put her in a worse position.

The collector just wants to be higher on her payment priorities than her medications, or doesn't believe that she can't pay this amount, and is using threats to try to force that situation. If she signs the affidavit, they win. It's a head game.

Cut her lifestyle down to NOTHING? I'm all for cutting back, especially when you have a large debt, but cutting back to nothing will do nothing except cause you to be unhappy and depressed, which is counterproductive.

She should cut her lifestyle down, but still think of herself sometimes too. It's okay to eat out at your favorite Mexican Restaurant with friends once a month, debt or no debt. Really.

Get a lawyer now. Don't wait for this to get any worse. The collector is violating the Collections Act and trying to force you to perjure yourself. You may have a cause of action damages, though I'm not sure what for exactly, so an attorney may be willing to represent you for a contingency. Even if you have to pay for it, though, it's worth the expense to protect your rights.

If the company goes out of business somebody else will buy your loan and start over collecting it. Since you are paying it monthly, your loan is valuable. If you stop paying it for a year it will be worth pennies on the dollar.

This site seems to have some good info and suggest adding a phrase to the basic "do not communicate" letter regarding a violation being harassment: [www.larcc.org]

It is also important to distinguish between a creditor and a collection agency in these situations and this site discusses some of the differences.

@Klaus_Kinsky: Only use deferment as a last option. I deferred my loans and am still paying on them 12 years after I graduated. A couple years ago I started making regular payments and the end is now in sight.

Contact the government agency that backed the loan in the first place so that they are aware of what the collection agency with whom they have a contract is up to. Ask NCO to send you the document via USPS and forward a copy to the government agency and ask them if NCO is authorized to insist that defaulted borrowers sign such a document and make it plain that you have been paying for over two years without your loan being rehabilitated. It sounds to me like NCO is trying to make a side deal outside the parameters of the contract they have with the government agency. Your loan should have been rehabilitated months ago.

@cf27:
Perjury can only occur IN court.

I have experience wiht this company inparticluar. They are very swarmy. They tried to collect a "Zombie Debt" from me. They called up to 10 times a day and tried calling me at work until I informed them they can't call a healthcare facility to collect a debt (I work in a hospital). They tried to bully my mother inot paying the debt(They called a old number I had when living with her, MANY years ago) and gave her my information, which is illegal since I am WAY over 18 and tried to tell her she was responsible since she is the onyl direct relative. I have filed a complant with the BBB. They are dishonest and try to play you, don't fall for it.

DON'T SIGN IT! If you're pretty sure that you can't meet the obligation (which it sounds like; being homeless and off your meds in order to bump up loan payments is probably not a good plan), then all you'd be doing is setting yourself for additional screwing once they come back and wave the now-violated signed agreement in your face.

It's probably legal to try and get you to sign it; no idea what they can legitimately do if you refuse. If the company goes out of business, I suspect some other company will just buy up the debt and continue collecting on it.

Personally I wouldn't stop paying -- you want to show that you're trying to pay off the debt in good faith, even if you can't pay as much as they want. I second the advice to seek some free credit counseling about how you should handle these choads and the rehabilitation issue.

I'd call the agency. Request to speak to a supervisor and lay out option C logically.

It is impossible for me to pay what you are asking. I am happy to continue paying you what I can afford or you can place it in collections and receive no further funds from me. With the first option we both get what we want if not the exact amounts.

In the second we both lose completely. Script-monkeys might not have any option but to keep badgering you with this 'procedure' but generally the next tier up can make actual intelligent decisions that benefit the company. If not keep escalating (in terms of requests not anger since the term is used for both in call centers) until you reach a tier that can. I know most call centers have the blinders on but you can usually find some level that can realize what is best for the company: smaller payments than they might like versus no money at all.

I had the displeasure of having my last outstanding loan end up with these people. They are the worst of the worst as far as student loan collections and they violated the FDCPA multiple times in less than a week. They do not own your loan they are only a third party collector. Send them a cease and desist and stop dealing with them. Your loan will eventually go back to the dept of ED or to another collection agency working for the actual debt owner. Hopefully the next agency is a bit more honest. You should contact the dept of ED right away and make sure they have record of your payments and talk to them directly about rehabbing your loan.

These collection agencies working for the dept of ED are horrible but they also are not anything more than someone working on behalf of the actual debt owner. I ran this gamut for years while trying to pay down what was left on an old student loan. The collection agencies actually make things worse. Sending them a cease and desist and working directly with the dept of ED makes more sense. You can also talk to the Ombudsman for the dept of ED if your having issues with your loan and collectors.

I got taken down the same kind of games by Pioneer Recovery at one point. Coooperating actually made my situation worse than if I had refused to. The dept of ED won't refuse money if you send them payments directly and last I contacted them they were able to work out deals with you directly on repayments. The collection agencies are not mandatory. My suggestion is to refuse to deal with them.

I would not sign this, nor anything from NCO.

This is a well known tactic from NCO, and very dishonest. They're basically trying to increase their cut of what they get from collecting on your loan.

The best thing you can do is to get NCO out of the way. Most likely, NCO does not OWN your loan, they're just collecting on behalf of the original issuer. I'm fairly certain that the government never sells student loan paper; they don't have to. If you completely default, they just garnish your wages and move on.

I would send the cease contact letter that Ben posted. Then, I would get in touch with the original loan issuer. Explain your situation, and be sure to include the payment history that shows you have been continuing to pay on the loan. Also be sure to mention the scheme that NCO is trying to pull.

Most SL issuers allow for graduated or extended repayment schedules depending on circumstances. I have had loans with multiple different banks over the years, (consolidated quite a lot over the years to take advantage of interest rates) and I've found most to be quite flexible, and willing to work with you.

If all goes well, your loan issuer will pull your account away from NCO, and you will no longer have to deal with their extortionist and illegal tactics.

Good luck!

@Pylon83: Well, that's not entirely true. It can also occur in sworn oral or written statements made outside of court that relate to a court proceeding. But yes, this wouldn't really be a perjury situation.

@mbouchard: 12 years! HA! I'm on a 30-year repayment plan (but a good rate). Gee, maybe I'll be debt-free by the time I retire.

@little stripes: I won't disagree with you about it being unacceptable to call someone at work. However, if your boss looks down on you because you had the bad judgment to get sick, and other people are hassling you as a result, it might not be a bad idea to see if you can't find a more friendly work environment once you are able.

@little stripes:

I disagree little stripes. If you (not you specifically) are serious about getting your life back in order and taking care of your financial responsibilities...you would save money whenever and where ever you can (obviously within reason).

Every once in a while is ok...but your average meal now at any restaurant is going to run you $15-$25...that does add up if you are going out "once a month." You shouldn't look at this as a small amount of money...because small amounts of money add up fast.

@little stripes: I never said it would be fun or easy. "If you will live like no one else, later you can live like no one else." -Dave Ramsey.Lets face facts here, she's up to her eyeballs in debt right now and will have to make a decision, do I want to sacrifice now and pay off this debt ASAP and move on with my life? ...or do I want to drag this thing out for a few more months/years cause I love tacos? Once she's debt free, she can eat all the tacos she wants.

I am so so glad (now. then, it sucked!) I lived in a single room hovel with a shared bathroom for 3 years while aggressively paying off my student loans. This is exactly what I feared, that some emergency would come up and put me in a hole so deep it'd seem impossible to escape.

@Tiber: ...Because it's SO easy to "just find a new job!" isn't it? And she's not already in debt, so quitting her job because of some harrassing phone calls TOTALLY makes sense.

Are you kidding me? No, really, are you? I know that my place of business, which is rather relaxed and pretty understanding, wouldn't particularly like me getting a ton of personal phone calls every day. It is unprofessional and takes away from your work.

Your sarcasm was completely uncalled for and your reasoning still makes no sense whatsoever.

"2. What happens if the company goes out of business?"

Most likely outcome is that the debt is resold to someone else.

@rshettle: It's not a good idea to just stop your life completely because of some debt. Depression isn't exactly cheap to treat, either. Notice I said "once a month" -- you don't want to stop your life completely. She's got a LOOOOT of debt. She's going to be stuck with it a LONG time. Sometimes it is, indeed, worth it to actually, you know, ENJOY life, debt or no debt. It's not all about money.

she should definitely not sign it. my friend had a problem like this. she got into a sticky situation with money and the company doing collections wanted her to sign a note saying she'd pay $250/mo even though she only makes $1000. she called me (and my mom) before signing it and basically if a judge wouldn't hold up that amount don't sign it. talk to a lawyer, but really, if they try to take you to court over it a judge will not make you pay more than you can afford. don't stop making your payments and keep receipts on EVERY payment. i recommend doing this with postal money orders even, that way they don't have access to your bank account numbers and you get receipts from a federal institution.

i had to do this as well. a collection agency wanted me to pay far more than i could afford on a valid debt so i just kept paying my $50/mo and never signed anything they sent me but got everything they promised in writing.

bottom line is, if a court of law would say a payment is excessive, they can't make you pay it.

There's no reason for her to sign anything at all. And so she shouldn't.

And she should head over to creditboards.com and ask for advice. The first thing they'll ask is what kind of loan (loans) this (these) are (government or private).

@Tiber: What economic reality do you live in? I'd love to apply for a work visa. Especially if all the businesses there let you take unlimited personal calls on company time!

I had a debt collection agency calling about 6 times a day until my insurance paid on an ambulance bill a few years ago. I found out I could insist on only mail contact and told them so. So, they started calling and hanging up, on the same schedule. Hopefully there is a special place in hell for people paid to harass others for a third party. It was horrible.

I don't know where the term "affidavit" comes in, but it sounds to me like NCO wants her to sign either a forebearance agreement - whereby they agree to not collect on the loan as long as she makes certain payments - or they want a confession of judgment. Either way, by signing the document, she isn't perjuring herself, but she is modifying her current contract and will be bound by it.

Unfortunately, student loans generally cannot be discharged in bankruptcy and will not be forgiven by the lenders for that reason. Therefore, she should continue paying what she is able to pay. She may also want to contact the original lender and see if they still hold the note. They may be able to help her.

@mbd: Agreed.

You have a payment obligation to NCO as they own this portion of your student loan debt. Start collecting records of your successful monthly payment history to NCO, and begin to document any correspondence between yourself and NCO. Let them make the move to seek judgment on the debt, if they do you can prove your hardship and your payment history. The tactics they are using now are just intended to scare you into paying more, but they will eventually be the foundation by which they could potentially move the case to formal legal proceedings and try to hose you.

Keep it in the back of your mind that this is where it could possibly end up, but don't let that cloud your judgment or keep you up at night. The best advice is that when you are taken to court by a creditor, ALWAYS appear. Otherwise, they get a default judgment. You automatically lose.

DO NOT SIGN, and ask for proof of debt. This sounds like a debt attorney who bought debt bulk (yes they can do that.) They're trying to get you to acknowledge your debt then they'll turn around and use that as proof of debt should you default on the "agreement."

DO NOT SIGN, if they cannot give you proof of debt or hedge use the advice above and report them. If they cannot give you proof of debt they cannot collect on it from you or anyone else.

(I'm not a bankruptcy attorney but I asked a friend of mine who is one)

@rshettle: To be fair, she ALSO has a chronic, apparently serious (or at least expensive) medical condition that is affecting her ability to pay back her debts.

She also seems to have made a pretty good effort at dealing with her debts, arranging payments etc... and dealing with her medical condition so I think that your suggestion, while presumably well intentioned is probably off base. It seems like this person is doing her best to sort out her life, and advising her to go the monk route seems a bit cold blooded and pointless.

The bill collector is the sleazeball here and if we should be giving advice to anyone it would be them. Medical problems are one of (if not THE) leading causes of bankruptcy in the US so I figure the fact that she's hanging on and making payments on this debt despite getting harassed is indicative of how seriously she takes her responsibilities.

She doesn't need you, or any of us telling her how to deal with her problems and certainly not with the tone you took.

Don't sign anything. Don't agree to anything with this scum. They can't do anything to you other than sue you, which they probably won't do. Don't be threatened by them. Don't even answer the phone when they call. I created an 'ignore' contact and add their number to it.

@Klaus_Kinsky: Yes yes! I'm dealing with this. Temporary relief added YEARS to my payments. My fault? Absolutely. Still stinks.

There are a couple issues with the advice given by Ben.

1) You can verbally instruct a collector to not phone you at work, but a verbal statement does not prevent them from phoning you at home, only a written communication does.

2) A cease & desist letter leave the collector no other option but to sue you. A collector is allowed one more communication with you to inform you of their intent, so even after you send it, prepare for at least one more call. You can, on the other hand, demand they cease communications by phone and only communicate by mail. This way, they are still able to send you dunning notices, but can't blow up your phone with harassing calls.

What about a consolidation loan to get everything under one servicer?

@Elvisisdead: You have to have decent credit to get an actual consolidation loan, I believe.

@little stripes: Tiber wasn't the poster who was "sarcastic", that was sleze69. Tiber's comment seemed quite friendly and sensible, and he didn't say to quit the job immediately, he said to think about it when the OP is able.

Even sleze69's comment didn't seem outta line to me, in that he was being sarcastic about the threat from FCO to call more :" they're going to place her account back in collections and start harassing her even more than they are now (they're already calling her daily at home and work)...".

NCO calls us... I can't get them to stop. Not because we owe them money. I don't know HOW they did this, but they associated the previous owners name with OUR phone number, which was a brand new number on this property, it wasn't the previous owner's number.

Anyone know how they did this? I figured they looked up our address and our phone number came up as well - but its under a different name. No matter what we tells these jerks, nothing takes. I've reported them many times, still no relief.

Any suggestions?

@DidSomeoneSayCookie?: Yikes. I'd say that's illegal harassment -- should have had the police trace the calls. That's a big no-no.

A Few things:

SIGN NOTHING! These people are not your friends, they are not your priest/confessor nor are they your buddy and are they are certainly not trying to help you. Signing anything puts you in a very compromising and (more) actionable position. Colossally bad idea.

I would be interested in unpacking this a bit further. Should you want some (free) assistance, advice, etc. you may send me a private message here and we can get communicating.

You are **NOT** screwed and you can work through this without a Debt CONsolidation loan, bankruptcy or signing your life away. A little hope and some hard work can get your through this issue. Don't give up!

Brendan