How much money can a collection agency demand for payment monthly?

I owe about $1,500 dollars to a collection agency. Due to circumstances, I can't afford a huge payment. Is it right for them to demand more than I can afford? I offered to pay $40 a month but they said that's not enough. He got me to commit to $100 a month, $25 a week. I have been served w/papers starting a legal action against me. The agency has me paranoid that if I don't pay the $100 a month, the court will find in favor of them and garish my wages (he told me about $150 + a month). I'm supposed to start making payments next week. Thanks for the help.