I got some really good advice yesterday, so I figured I would give an update on things. This morning I'll be calling the collector back, requesting first that he provide me the offer we discussed into writing and fax it over to me today. Tomorrow, I will try again to have them settle for the full amount on the 17th of next month and then go with my 3 payment plan if they do not like it.
The threat of bankruptcy is mainly just a threat, I have considered Chapter 13 as a way to take care of them (pay over 3 years a set amount that would take care of the $40K). Several places I've read they recommend that threat to have them back off (because they may get nothing then...) I know I owe them and I want to pay them back, but have been unable to until now.
Regarding them going after me through court, my concern is the wage garnishment. From what I've read, they can take up to 25% of your paycheck. I'm pretty certain my employer wouldn't let me go because of this, but I've been at places where they would just try to find another excuse to get rid of someone. I am also in the works of starting my own consulting business (shhh!), but don't want them trying to take too much cash that I have troubles keeping it going.
I'm also planning on talking to the tutoring job I had in the spring about doing some work in the coming 2 weeks so that I can ensure a cash flow so that this settlement does not leave me without gas money. My other on-call job has been very slow, I suspect it's because people are hopefully playing outdoors instead of breaking their computers.