After I graduated I had several companies calling me asking me to pay my loan payments over the phone. I refused, stating that I wanted to see my balance and wanted to mail a check in. They said the only way to pay was over the phone. That didn't seem right to me and I had been screwed over by a company before. I paid a debt of just under $500 and it was a fraud. I wasn't going to let that happen again, not so easily anyhow.

Anyhow, long story short, I defaulted on my loans and they take out $190 a paycheck. It's been going on like that for about eight months or so now. The other day I received a call from "Pam" who works for Direct Loans or Pioneer Credit Recovery, she wasn't specific.

She informed me that sending in some paperwork that if approved my loan would show as 'Paid in Full' on my credit report and my payments would be lowered, and also I'd have 20 years to pay them off. Granted, if I took the full 20 years, I'd end up paying 10k on top of my loan after all the interest.

http://www.loanconsolidation.ed.gov/ 

According to that online calculator my payments would drop to something like $220 a month and I'd be on the Income Contingent Repayment plan.

"Pam" also told me to sign three papers, send them to her, over nighting them which costs $20 bucks then call her back with the tracking number. She says the sooner they get the papers, the sooner they can stop the garnishment and get my credit 'fixed'.


My questions are ...
Does this this sound legit?
What's the difference between Income Contingent and Income Based?


I have the paperwork filled out, but this seems almost too good. Albeit, I'll be paying a few 1,000 more through the duration, but short term it's going to help my credit faster. I think?

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I am far from a financial expert, but I would be very leery of "Pam" or advice from any debt collectors.
Especially when they attempt to pressure you with "I'll help you but you have to overnight the paperwork"

But for what it is worth.....
There is a show on CNN that I watch called the Clark Howard show. He is an advocate for all manner of financial information and advice. He is on the up and up.
Here is a link to his website and he discusses that very topic and he links to that same site.
Clark Howard 
He also answers specific questions on his show.

Actually, this might be a good question for Trippster.

Good luck to you on this Z2C, but make sure that you thoroughly check out your options.... a few extra days of research won't hurt you.

It sounds fishy to me, Kevin, though that could be my gut reaction: I trust no one who calls with "offers" on the phone unless it is someone I recognize from before.

A couple things you could try:
1. Better Business Bureau.
2. State regulator's offices. Legitimate players in the loan markets tend to get regulated up the kazoo. I don't know what the appropriate agencies are called in Wisconsin, but I'm betting there are several. Banking department, Secretary of State, D of Education, Dept of Justice, etc. There are a lot of "deal with your debt problems" scam artists out there; and that means that it's likely, particularly in a nice the-government-is-here-to-help-you state like Wisconsin, that there's several government agencies who are in the business of seeking out and dealing with scam artists.
3. Ask "Pam" for references of satisfied customers, etc. Names/contact information of people *you* can contact -- not just testimonials and not just "people she'll put in contact with you. (The people she puts in contact with you might just be the scam artist at the next desk.) And then check out what those people say; heck, you might even check out whether those people are real or not.

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As a general rule, if it sounds to good to be true, it probably is not true. Best to fall on the saide of caution.

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I actually think that site is legit. However, Wade is right. Check with the BBB. They'll tell you. It will take an hour of your time, but this is something that will affect you for the next decade.

You want to lock your loan at a fixed rate now. Not later, but now. The economy is in the toilet and this is as low as it's going to go. Pay off your student loans last. Your credit cards should be paid off first. Of course, pay the student loans and don't have any lates on them.

Yes, it will show paid in full because someone else paid them off for you. Then of course you have to pay off the people who paid them off for you.

I'll explain more later. Mrs. Z needs the computer. But do what Wade said in the meantime. Contact the BBB first before you do anything as you just want to make sure they're legit. I think they are as I consolidated years ago.

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Read the fine print.
I had a company contact me & offer to pay off my student loans with a bonus & an opportunity to travel.
The guaranteed technical training was what sealed the deal.
But at least I made Staff Sergeant before I got out.

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As per the advice here, I did do more research, they are legit.

The Pro's.
Loan is paid in full.
I'm removed from default status.
No more garnishment.
I have 20 years to pay off a 31k debt.
My payments will go from jus under 400 a month to jus over 200 (unless i pay more)

The Con's
I have 20 years to pay off the loan, if I take that full 20 years I'll be paying just under 10k EXTRA on my loans.


The con is pretty typical of any loan. The longer you take to pay it off, the more you end up paying.

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OK, you want the bads removed from your record, so it may be in your best interest to do this. Also, I'd go nuts if anyone was garnishing my wages. It already pisses me off the government takes their cut before I get my cut. WTF!

Find out if there is a pre-payment penalty. If not, go ahead and do this.

You can always pay more. When your financial situation improves, pay double the amount and get that blasted loan paid off.

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