MRS Collections...Need Info

I talked with someone this morning trying to settle for 1/2 the amt that I owe. I owe $1200 and they'll settle for $700. (last month would've settled for $600). So, they emailed me a letter this morning as per my request and put someone elses name/account number and info on it. I was livid. I assumed that all of my info was more than likely going to someone else. She called back after I emailed her telling her it was a hippa violation to disclose someone elses information. She said it wasn't then asked why I was so angry blah blah blah. She did resend me the the right letter. Does hippa apply w/credit and collections. I thought it did. I guess I was hoping for some leverage...hoping I could get her to go down some on the settlement. I want to pay...but I'm unemployed right now and it's hard. I offered a lump sum of $300 and they declined it. Will they sue over it? That's the last thing that I need/want. They are harrassing me, my mother and my sister n law w/phone calls.