After the course was done, I still wasn't able to find a job, so I began applying for interest relief. This lasted for almost a year until my applications for interest relief were being misplaced regularly. It finally came to a point where I was told that I would have to make the payments for the months that the interest relief papers were "misplaced" before they could allow me to apply for interest relief again. I couldn't pay so my understanding was that this debt would go into collection and I would not be able to get another student loan in the future.

In 2006 I rec'd a call from a debt collection agency regarding one of the student loans. I disputed the debt b/c I had gotten a written credit report a few months prior that did not list the debt at all. According to that report the other loan had been listed as a bad debt years before and at the time I had called that bank and was told that the debt was no longer on their records and had been essentially written off.  I was unclear as to why I would be getting collection calls for a debt that wasn't on my credit report and why one loan would be written off but not the other.

I was unemployed at the time, but made efforts to pay. For 3 months I made $20 payments. Then I found out that I wouldn't be working for an extended period of time b/c the doctors had found cancer. I told the collection agency that I could no longer pay and why. They asked for something in writing, but I was uncomfortable with that so I did not.

Recently a new collection agency has been in contact with me. The debt has accrued over $3000 in interest, still is not listed on my credit report and can be settled for 80% of the cost. My issue is that I am still not in a situation to pay and don't anticipate being in a better situation any time soon. I work as a supplemental employee so there is very little job security and I have two young children to support.

The collection agency has sent my paperwork to prove that I cannot pay and has told me that they will present my scenario to their "client" to possibly get the debt lowered or forgiven. Do I trust a collection agency? Is this just an attempt to have me acknowledge the debt in writing? I don't condone avoiding debts and I want to set a good example for my children, but I really cannot pay this 10 yr old debt.

Any advice would help.