Up until last July 2004 I was current on my student loans. I was daignosed last summer with some fairly severe medical problems and knew that I was going to be hospitalized for an extended period of time.

I contacted the Direct Loan's and told them of my situation. I printed out and submitted a deferment request to be started in September of 2005. I sent a cover letter with the deferment request specifically asking that they contact me immediately if I did not fill something out correctly. I still have the photo copies of both of these documents.

Because of my medical condition I had to give up on my successful business I had started in Arizona, and move back to Oregon to be closer to my family. All mail was going to my brothers, and my phone number listed with everyone was my brothers.

I am starting to get back on my feet now. Luckily I bought a house a couple of years ago just before this market got hot and made a decent amount of money. With that money I have now paid off every cent that I owe to anyone, including a ridiculous amount of medical bills.

I contacted the Direct Loan department in July to get started making payments again. They said they had a record of me requesting the deferment, but no record of them ever processing the paperwork. They did say that I could set up a forberance and it would make my account current. So I agreed, but doing this I thought that a deferment and forberance were the same thing. I also did not reallize that my account was being reported as over 150 days late for 7 months of non-payment to the credit bureaus. I found this out when I started house hunting again now that I am back on my feet and working.

I have recently paid off the $18,000 I owed in student loans. I have contacted them numerous times about my situation. I finally had a lady a few weeks ago tell me to fax in the paperwork that I had originally sent for a deferment request. I have not heard anything back from them. Yesterday I sent in a certified letter requesting all information regarding the debt in the hopes that they will not respond in a timely manner because it is paid off. Ideally I would just like the late payments removed because they are not my fault, and with out them I have perfect payment history since 1999. I believe this has dropped my score over 100 points and is now around 610.

They say that had been contacting me by mail and leaving messages. Honestly, they probably did contact me by mail and it was just thrown out because my brother thought it was just a statement or something else (they send tons of statements throughout the year). But at the time the only mail my family was giving me was from friends and family. I had a couple weeks to prepare myself before hospitalization and assumed I had taken care of everything like this. Regarding the phone messages they say they left, I didn't have an answering machine so that was not possible, unless they left a message with my brother which he said didn't happen. (probably irrelevant, but just wanted to hit everything I have discussed with them on the phone)

I have this, and 2 medical colllections (that should be dropped off any day now) on my credit report. This is killing my chances of getting a prime interest rate. I saw that you have some experience with this and any advice and help would be greatly appreciated.

Thank you in advance.