Need some genuine advice from ppl who have been in this situation..?

If your credit card account is in collections, that means it was charged off by your credit card company, and thus, the damage to your credit has already been done. To accept a lump sum settlement for less isn't going to hurt your credit anymore than it already is! I would take the settlement (get everything in writing and only send them a money order) and then, if you can, see if you can get a secured credit card. Start rebuilding your credit. Yes, it is possible to have your credit rebound, but it takes time. It doesn't happen overnight.