I don't see any FDCPA violations here.
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They can try to collect as much as they can from you. It sounds like you did a great job of negotiating a decedent settlement from them. If you can afford to do it, it sounds like a good compromise and a way for you to get out from under this. I would do everything you can to come up with the $1,400 and put this behind you.
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If you have a written offer of settlement from them and you accept and perform under that settlement agreement (i.e. you pay them timely) I would think that you are good to go.