[asmom]

Unlike the others, I am not going to tie your unwillingness to pay off your debt to morals. The credit card companies willingly loaned money to people who perhaps could not afford it in an effort to make huge profits and it worked. I won't even get on the subject of unreasonable fees and interest rate hikes. Greed goes both ways. It's quite unbalanced to suggest that the banks' actions were justified as "just doing business" but consumers have some sort of "moral obligation". It's business both ways. And I am someone who never even pays my bills late. I've never not paid a debt in full. But that's the way I do business. Now the way I treat people and individuals is guided by my morals and principles.

However, I do question the way you use your resources. You are saving the $25K for "emergencies". You've already lost your house and you ran up debt paying off medical bills. What do you consider an emergency? If you had that money on hand or the ability to save that much money, you might have considered paying your mortgage until you were able to get an adjustment or paying your bills outright before you accrued the debt. It's water under the bridge now but for food for thought in the future.

P.S. If you have a good, stable income, then pay the debt off in full. You don't have to pay at once. Start with a lump sum of maybe 10K from your savings and pay the rest off over a year from your income. You'll preserve a good bit of your savings that way. If your job situation is shaky, go for the settlement and hold onto your savings. In the future, pay as you go.