Sent to collections

the easiest thing is to create the collection company as a vendor

edit the bill, change the vendor to the collection company, save

Make a Vendor Credit to the vendor you owed, all this time. On the Expenses tab, put that amount to an Other Liability account. Apply this in Pay Bills. Now this no longer is AP; it is a different liability. Now you issue checks to the Collection Agent and post the "expense" account as that Liability account. You have two different types of liability here; move it from AP by offsetting it to "real" other liability.