Then keep negotiating.
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Your terms are reasonable, so if the collection agency does not agree, then keep negotiating.
In the unlikely event that the collection agency files a lawsuit, you ought to retain defense counsel to defend it vigorously.
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This Avvo.com posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.
It seems as though you are taking a solid approach. Continue negotiating with the creditor until you can come to agreement. I would strongly recommend that you consult with a local debt settlement attorney to be sure that your final settlement agreement is acceptable and that it accomplishes your goals, before sending in any money.
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Get an attorney to help protect you. The settlement agreement must be signed by persons with proper authority. The report to the collection bureaus should be done by the creditor who reported the account. If the original creditor reported the account, the original creditor must promise to remove the negative information. An authorized agent or officer of the original creditor must sign. You might want the creditor to report the account as "delete tradeline", as this is better than a paid collection. What about the 1099-C form that you will receive next January?