Can I arrange for a reasonable payment option from the collection agency?

If it goes to court, the creditor will be entitled to the debt and usually the amount it cost to get the judgment (atty's fees, filing costs, etc). A judge could arrange for you to pay it over some time but there is really no system for him to do that. Contacting the company and making a payment arrangement now will save some money.

Collections agencies are usually willing to accept payment plans. Once the debt account has been referred to an attorney for collection, though, they're usually somewhat less willing to settle for a payment plan, and very infrequently for small amounts. If you can't reach an agreement with the attorney before it gets to court, though, you likely will still have the opportunity to get put on a payment plan to repay any debt you owe that's confirmed by a court decision or order, but that's based on the size of the debt, your assets and your ability to pay, so it's difficult to say what the details of such a plan might entail. In addition, though, to the amount of the debt itself, there will likely be other costs involved in the final award from a court, including court costs, fees, etc., which may be significant. It's all relative, though, to the total amount of the debt that's outstanding.

You may be able to work out a payment plan however, you may want to talk to a lawyer who is often better suited to negotiate for you.