I deal with legal issues all the time for my employer.
I am not a lawyer, but deal with them all the time.

If you are going to settle make sure you get a settlement agreement that states that the entity owed the money settles in full for $X for all debts known and unknown, releases you from any liability and can take no further action against you. You can also add that no negative reporting will be made to any credit entity. I have a standard format, but it is at work and I only work Mon, Tues and Wed. If you still need on on Monday, I can send it via email. Just PM me.