On a VA loan a sellers concession not only can pay for closing costs but can be used to pay off collection accounts as well.
There is a website called http://www.valoans.com
Here is a quote from the site
"The VA guidelines state that if a collection is minor in nature, it usually does not need to be paid off as a condition for loan approval. Judgments must be paid in full prior to closing. A borrower is not eligible for the loan if they are delinquent on any federal debt. This can include tax liens, student loans, etc. Payment arrangements that would bring the borrower up to date may be considered for loan approval."
The first step is to get with a loan officer and get an application. They will let you know what is needed in the form of doc's and such.
Best of luck!
Remax / Lakeland