Borrowers can get out of default and improve their credit if they make nine "reasonable and affordable" payments within a 10-month period. There's often dispute over what is "reasonable and affordable." Each kind of loan has different rules. The minimum monthly payment is usually at least $50, or a small fraction (generally less than 1.3 percent), of the total debt. The manual gives this example of collectors' incentives: "If the borrower owes $10,000 at the time of rehabilitation, his monthly payments must have been at least $114 in order to be automatically considered "reasonable and affordable" and for the PCA to earn a commission."
An interesting note:, the manual warns collectors of a glitch. The government's Debt Management and Collections System (DMCS) "currently calculates projected collection costs incorrectly. The system calculates collection costs on any existing fee balances in addition to principle and interest. However, ED requires PCAs to calculate projected collection costs based only on outstanding principal and interest."