I would recommend taking the settlement. It will discharge the debt.
If the debt remains, it can become a basis for denial of new credit even after credit report exclusion of the collection.
Many mortgage lendors request disclosure of any unpaid, delinquent debt, and credit report exclusion does not extinquish the debt.
If I were to push for anything, it would be that they agree not to report settled/paid for less.
That optional reporting informs others that you did not pay the entire debt, and is always a very negative comment.
Absent reporting of settled for less, your CR will appear the same as if you had paid the debt in full.
