They'll reach out to get the problem solved way before it reaches collections - the concept of collections is that they sell the debt at a loss so it's against their interests to do so.
In addition, if you can prove that the debt is invalid (if you were not receiving the service you've paid for and made reasonable attempts to resolve it beforehand) then the collectors themselves will make a loss which should over time sour their relationship with the original company.
In my case, debt collections was the only way to actually get my problem resolved in the end. They've passed the info back to the company and they've finally cancelled the contract (and the "debt"), something I wasn't able to do with the company directly because I couldn't get through anyone competent enough to understand the situation and willing to fix it.
Credit history is a valid point however in my case I do not need credit anytime soon (the only potential reason I would need it is a mortgage in the far future) and in my country credit report entries expire after 6 years so it was not a problem.