Called Debt collector to settle.

Called the debt collectors to try and settle on a debt that I have from Upstart. They sold the debt and now they’re collecting on it. They are using a local debt collection firm to collect the debt. I got papers served so they’re serious. The debt is for $3600 including fees. I called today to see if we could settle for less. I offered a $1500 lump sum payment and they counter offered with $3200. The counter offer made me realize that they were not interested in settling for anything less. $400 off is quite criminal. Also made me think they’re hungry for getting the most they can out of me and everyone else. With this being said when I got served papers at the very end came a set of papers that talked about my ability to go Into mediation with this company and try to settle outside of court. But I would have to file and answer with the court. My question is should I just set up a payment plan with them and take the loss or try to go into mediation and see if I can work something out or maybe see if I can even get the case dismissed. Help me out please I have until the 18th to figure something out.