Sometimes a deal is too good to pass up.
This even goes with dealing with collectors and bad debts. If you have the ability to pay your debt in full, it's a good idea to do it and move on. If you're not able to, work out a deal. Get it in writing.
This is a process that's not going to take five minutes and then the deal of a lifetime will come land on your lap (i.e. settling a $5,000 debt for $900). However, if you can land this kind of a deal and get it in writing, jump on it. Then, I suggest (as well as suggested by thousands of financial counsellors) keeping that correspondence FOREVER . . . just in case the collector comes back years down the road and wants to collect the balance of what is owed.
This is the same way it can be handled in buying a used car--new cars are more difficult to get a deal on, due to their low margin. Don't be afraid to say, "That's not good enough," and see how low a person can go.
Let's say you have an old debt of $3,000 and all you have it $900. But the most they'll go down is $2,500. Tell them NO DEAL and hang up. Call them back a few days later and offer $900 again. It may take two dozen phone calls before they'll agree. Be persistent. If a low figure is all you can do, then that's all you can do.
But make sure to get the deal in writing, either by mail or e-mail or fax.