I would record the conversation but don't tell them you are. Michigan law allows this. You need to know that their position is not as strong as you think. Sure they can take you to court and ring up some attorney fees (which in a collection case are not collectable unless the contract says) and if they get a judgment for the debt you get to ask the judge for an installment plan which is usually granted and usually less then the original monthly payment. These collection agency are so out of control. I would fight back and not give into them. You have more power than you know. Usually they violate the Federal and Michigan collect acts. This sets them up for liability. Feel free to give me a ring for more help.
You cannot be counseled until the contract which you signed is reviewed, as well as the actions of the creditor which seem overly harsh and possibly in violation of the Federal and State laws regulating collections.
You really need counsel but I understand that you believe you cannot afford one, therefore cut your deal, make sure you can afford it, keep it religiously and never deal with this, or a lender like this, again.
To the PROSPECTIVE client, please call myself or another attorney for your choice with more detaiils and an appointment. My PRELIMINARY answer to your question(s) is for general purposes and based upon what little information you have conveyed. It is based on such limited information that the general answer should never be relied as a reason for your action or inaction. My response does NOT establish an attorney-client relationship and such may only be established by mutual agreement, and the signing of a written retainer agreement, which will generally require payment for our services, as this is what we do for a living and, just like you, we must get paid for our work.. .
The only thing I would add (in addition to recording any further conversations) is to make the payments anyway. Call back and see if you can reach someone more reasonable. Many of these collections people use fear to get you to send them money. If you call back and reach someone else you may have an entirely different experience. If not, set the money aside that you would have paid them in order to have something to pay up front when and if they do take you to court.
Need to know more but you may have a FDCPA violation. If so, you do not have to pay for an attorney. My firms specializes in defending people against illegal debt collection practices.