The debt collector's agreement to a settlement is almost certainly with approval of the OC.
If you pay the debt to the debt collector per a settlement agreement offered by them, and it is clear that it represents satisfaction of the entire debt, it will cost you less money overall, and more importantly, obtain earlier satisfaction of the debt. Both the creditor and the debt collector will then be required to update their reporting to $0 balance.
You could, as part of your settlement negotiations also request the debt collector to delete their collection, and if they wont agree to deletion, at least agree not to report that the debt was paid for less than the full amount, thus making it appear in your credit report the same as if it had been paid in full.
There thus appears to still be some negotiation room with the debt collector that you might wish to pursue.
The garnishment will string out the payments, and thus if paying the settlement would be a burden, then the garnishment might be preferable.
If the OC begins garnishment, they are doing their own collecting, and would most likely terminate their collection agreement with the debt collector.
CRA reporting guidelines instruct debt collectors to delete their reported collection if they no longer have collection authority and the debt remains unsatisfied, so taking the garnishment path could result in deletion of the collection.
You still have options.....
