Jo,

I have "been there done that" in regards to medical bills and collections and even small claims court. 99% of the bills were from my husbands cancer.

Some of them we were able to do a settlement - pay $3000 on a $5,500 bill, but when you do a settlement like that they want it to be paid in one lump sum (we put the $3000 on a credit card).

On others we were able to make a paymeny arrangment. One in particular was a $4,600 bill, and we negotiated to pay $100 a month for 50 months (yes that comes out to $5,000 total being paid, but we agreed to pay intrest if they agreed to let us make monthly payments).

So the basics is that if you want to pay less than the total bill you have to agree to pay it in one lump sum.... and if you want to be able to make monthly payments then you might have to agree to pay more than the total sum to cover intrest.

One thing to remember when dealing with collections agencies -- remind them that if they bring you to small claims court and if they win - they still don't get their money in a lump sum. When judges in small claims court make a ruling they do it in such a way that the loser (the person who has to pay) is ordered to pay $xx a week for xx weeks....

Your small claims court might be different, but when i talked to several people in different states, this is how their small claims court works (and how it works in my state too). It's only on Judge Judy that the ruling is a lump sum and not a payment plan.