My wife got a computer and has not paid on it since February because of a car accident. It was turned over to a collection agency and we have never received a bill since. Now she had a collection agency contact her and say that we needed to send them all the money or set up some arrangement, she said we would be able to give them $50 a month and when we get our taxes we would send them the rest. They got rude with her and said that $50 is nothing and they were going to mark it that she refused to pay. Can they say that she refused to pay when in fact she didn't? If they refuse the payment what happens, is the debt cancelled?

Never speak to them on the phone, always put it in writing, so send your offer in writing and wait for them to reply.

NOTHING cancels the debt except payment either in full or a settlement amount. Sure they can lie about it, but you should not pay them unless its accordng to an agreed upon plan.

I'm kind of surprised that they wouldn't accept $50/month, a computer doesn't cost that much.