I've heard of this sort of thing happening.
Another trend is that they'll have you go delinquent on accounts that were actually current to gain some leverage... which really helps the 'ol credit score!
You may be able to do better on your own...
Debt Relief - Why Most Programs Have A 75% Failure Rate
This is not an endorsement of the product, as I haven't reviewed it... but it does sound plausible.
The website mentions that some creditors refuse to cooperate with debt negotiation companies, so you may end up having to handle this one on your own.
If you can handle this account, maybe you can handle the others?