Dismissal without prejudice means they can legally refile the suit.
Whether or not they will depends upon the circumstances of whether the reason for dismissal might temporarily lead to some additional criteria that need be met, but the judge did not bar refiling.
Implied in the post is that payment will result in removal of the collection.
That is not usually so, but Midland has established a public policy of deletion if the debt is paid and the DOFD is at least two years ago.
Just make sure, as suggested previously, that you do not make any clear admission of legitimacy of the debt in your settlement negotiations, and you will not have an admission of debt.
A settlement for less offer is only a negotiation, and if you play around with lowball offers, they can always simply refile.
I would be cautious in any extension of the period if they are likely to win in court, and there are not remaining conditions that would prevent refiling.
