Bankruptcy is viewed as the absolute worse thing on the credit rating.
Medical bills, even delinquent ones, are not looked at as harshly as an unpaid mortgage, credit card, auto loans, etc. I don’t know why, but they are not. Maybe someone can offer some insight into that one.
It is best to make a settlement offer and get it in writing BEFORE you pay a cent on the debts. You need documentation. After you pay (get a cashier’s check from your bank – easy for the bank to trace for you), make a copy of the cashier’s check, the letter from the creditor stating the amount and then send one copy of both of these to each of the three credit reporting agencies. Send them priority mail with a delivery confirmation.
You need to notify the credit reporting agencies because the companies will take their time.
You need to supply copies so they know that you were only asked to pay $ xxx.xx amount and not the full balance reported, also that you paid what was requested in writing.
Document, document, copy, copy, copy. Get signatures. The priority mail is required to get delivery confirmation. Time is important. Esp. if you are doing this to get a mortgage, car loans, etc. and need to document that the situation was taken care of in a timely matter. You can prove that you paid the exact amount that was asked of you in a timely manner.
P.S. From what I know, if the item is true, there is no way to get around the 7 years of reporting. As I said before, the credit report is there for your creditors, not for you. Guess who they work harder to benefit?