The 27-year-old takes over from Paul Reid after he was released following the club's relegation from League One last season.
Collins fought his way back into the Iron side in the last campaign after a year-long injury lay-off with a torn Achilles and tendinopathy.
Manager Brian Laws told the official club website: "I gave him the armband on Thursday. It's a good time for him to have it, Michael will be a focal point of our team.
"He will lead by example, which will help a lot of the younger players too - on and off the field."