This is a difficult situation. It appears that there you entered an agreement with this agency that was subsequently breached when you got sick. The short story is that they probably are within their rights to report you to the credit agencies, assuming that the debt is valid, and that you broke the agreement. You narrative leaves out some crucial details. Did you reach out to the collector when you knew that you would miss a payment? In many cases, collection agencies will allow a missed payment, if they can be given assurances that payments will continue. In this case, it would seem prudent to tolerate a missed payment that they have notice of rather than undertake the expense and effort of pursuing the account through legal channels.
Mr. O'Brien is licensed to practice law in Georgia. This response does not constitute legal advice and does not create an attorney / client relationship. This response is legal education and is intended to provide general information about the matter in question. Many times the questioner may omit details which would make the reply inaccurate. Mr. O'Brien strongly advises the questioner to confer directly with an attorney in their own state to acquire more information about the specifics of their case.