The fact that it's a collection agency does not tell us anything about who presently owns the debt.

Your state has a longer-than-usual limitations period, and the negative entry will be on your report for @1 more year (and potentially much longer if they get a judgment), so settling may give you peace of mind. But you should have your settlement terms in the form of a signed writing before you send your check, lest they cash the check then announce, "We didn't promise you that."