This highlights the importance of seeking debt help quickly as the situation above is perfectly legal.
Unfortunately the increase in debt problems means many people are either trying to sort things themselves or wait many weeks for CAB or CCCS to pull their finger out, however it's often too late and once a debt collection or management agency has bought the debt then options are reduced.
Bear in mind that the collection agency have bought this debt have to make a profit on it - it is unlikely you will negotiate anything much lower than the initial value unless they believe you will go bankrupt and have no assets.
It may be that bankruptcy is the only and best option if you cannot repay the debt in full.
Again - for others in a similar position you must get help with your debts quickly. We are an independent debt solutions company who work on situations like this each day. We believe we are better placed to solve peoples debt problems because we start with a blank sheet of paper and work from there. Yes we charge a fee but it's not upfront and personally I think we work very hard for it because quite often peoples debt situations are very severe.
Our website
http://www.dcmmoney.co.uk has a lot of useful debt help and advice on a range of subjects.