Yes, pay the $1700.00 with the attached letter OC started for you.

Make sure to write "without prejudice" somewhere on there.

@OC: If you do the math, they're letting them off for less than what they would've paid over the term with monthly payments. Some agents will take a bird in hand over two in the bush.

Hate to say it, but it sounds like you made a critical mistake the day you sent off your first payment to this outfit. That being, you neglected to request a settlement contract in writting.

I'm not sure how much you've paid already, but before agreeing to any settlement arrangement you'd be wise to demand they forward you a written settlement contract which outlines the terms you've stated here. As well, that contract should include wording along the lines of: "This $1700 payment will reflect a full and final settlement of account # .....".

Failing to have such firmly worded terms might result in the balance of your account being later sold off to another agency for collection.

Use extream care when paying these firms. As it sits now, this one already knows that you are willing and able to pay $150/mo at least 'til the end of the year - hence why they are eager to extract a larger sum out of you now, if they can. => They don't know if your circumstances will change next year ?? but it sounds like they've already made a good profit. What you want to avoid now is making a lump sum payment on this account only to find out a year or two down the road that your payment was only towards your balance with them - maybe they already have plans to sell the balance to another firm?

I started dealing with a collection agency mid 2009. I made an initial $800 payment and have given them posted cheques for $150/month up until the end of December and then we were going to discuss payments again. The agent that I spoke with told me that with interest I would have to pay a total of $5000. (The original amount owing was slightly over $2000.) Today I receive a letter from this same collection agency stating that they have purchased my account (same letter that used to get last year) and that I can pay just over $1700 by December 23rd to settle my account. I do have the $1700 to pay. Will this clear my debt with them even though I had a verbal agreement to pay the $5000 since they sent me the letter?