So the story is this:

 

I was paying my student loans ages ago (well over a decade) and the smallest of loans ended up going to a collection agency because of missed payments.

The payments were missed because the government was applying my payments for this loan to a different loan.

I called the government to resolve this and they said its too late I must speak with collections.

I called the collection agency and they were a bunch of idiots acting like the typical scumbags collectors.

I ignored this loan for ages after that. It got passed around to a few different agencies over the years.

Ever since the government has been using my returns and tax refunds to pay the loans.

Most recently I had approx. 2k of my return applied to this loan.

The amount I currently owe is approx. 2k (grossly overcharged interest amount)

I finally called these guys and they told me the best they can do is give me a break and I'd have to pay $1800 approx.

They sent me a letter stating this amount with no actual payment slip.

I called back and tried to bargain further but they wouldn't budge.  I told them that I'm trying to resolve this old debt.

 

They said the following: 

 

The discount they gave me is the max allowable by the government unless I want to fill out paperwork and ask the government to reduce it.

They also said since I didn't pay the 1800 by the date specified in the letter that they hit my credit but might be able to reverse it if I pay immediately as it just happened.

 

Is any of this true?

Would this have been off my credit and they just hit it again with a negative report?

If so, are they able to reverse this as they stated?

Should I pay this amount even though it is unfair that I'd be paying basically 3 times what the original loan was?

What would I need in writing from them if it is best for me to settle at this amount?

They kept saying that the fact that if I pay the stated loan amount in full and my bank slips would be sufficient.

Please let me know asap as I don't know what to do. thanks!!