[b4freedom]

I'd actually disagree with most people here. If they offer you a settlement of at least 30% off then take the settlement. I’d personally aim for 50% off. As long as your debt is settled, everything negative on your report will drop off after 7 years except for bankruptcies and certain types of judgments (10years).

And, if you're credit is completely destroyed, it'll take more then 1 to 2 years to rebuild. It'll take 5 to 7 years.

So, you should save every penny you have to buy a new house so that you can put down more then 20%.

What I think you should do:
You should go house shopping. Don't buy one. Just look. Figure out what kind of house you want and how much it'll cost you. I don't know where you live and how much houses cost in your area, but let's assume that its $200k (for the sake of my point) and you could get a 30 year fixed mortgage at 7%. That's 1330.60/month for your mortgage. But don’t forget the property taxes, insurance, and everything else. You should figure that all out and come up with an amount that a new house will cost. Let’s assume the taxes and everything else is $700/month to bring your total to $2030.60 ($1330.60 mortgage + $700 taxes and everything else). Now, pay off your debts and then open a high yield savings account with an online bank. Every month, have $2030.60 transferred into that account. In other words, pretend you already own a house and you’re already paying for it. Let’s assume that on average your account returns 3.5% interest on your money. After 7 years when everything negative drops from your credit you’ll have $192,900 in the bank to put toward your $200k house. And, don’t worry about houses going up 10%/year in price over the next few years. We’ve seen an end of that for awhile.