What are your options when paying a collection agency?

You have two options:

1. Do.
2. Or don't.

With these two options comes several potentialities.

If you do pay them, they may be able to obtain your asset information from your payments. This makes it easier for them to attach your assets in the event they obtain a judgment for the lender against you. If you pay them and continue to pay them until the debt is satisfied, then the same result occurs as if you had paid the original lender.

But...you do not owe the collection agency. You do owe the lender. You do not have to talk to the collection agency at all. You are not required to make arrangements to them or pay them. You should not give them any information.

If you do not pay the agency and you do not pay the creditor, the agency may eventually process the account for legal action on behalf of the creditor. At this point, their collection engine really goes into gear. They will take any information you have provided to them, and some you did not, and seek to attach your wages, your bank accounts, your stocks, your bonds, your certificates of deposit, your state tax returns, or any other liquid assets they can (and will) find.

If you pay the creditor and ignore the agency, you will hurt the feeling of the agency employees. They may even become angry, but as long as you continue to pay the creditor, there is little they can do. Just be certain to pay the balance as quickly as possible and keep record of every payment you make. In the event the agency files for judgment you want to have these records handy to be able to steal their thunder in court.