There is a lot of information missing here, but based on what you've said it would be in your best interests to consult with an attorney. You didn't mention an amount, so I don't know whether the case is in small claims court or in the regular circuit court; procedures are somewhat relaxed in small claims court, but if the case isn't in small claims court and you proceed without an attorney, you will be expected to be familiar with all of the procedures, deadlines, filing formats and requirements, etc. just as you would if you were represented by an attorney.
It's possible that the goal of the creditor is to obtain a judgment prior to sale of your home so that they can put a lien on the house and obtain full payment directly from the proceeds of the sale. At that point, of course, the creditor would have little or no incentive to negotiate a settlement. It's also not clear what other assets you may have, and whether they might be subject to seizure to satisfy a judgment. A local attorney can explain to you exactly what is at risk and how you can best protect yourselves under the circumstances.
There are several considerations an attorney should discuss with you.
First, if the matter proceeds to court, the creditor will likely enter a judgment, which likely will give rise to a lien on your real estate. You may be able to discuss different terms to pay any judgment that is entered, but the lien will come up at your closing even if you are paying on the judgment. If you intend to pay the debt from the proceeds and are not struggling with more creditors, then perhaps this is acceptable to you, but I would discuss your circumstances more specifically with an attorney.
It may be helpful to understand the interest rate on a judgment is less than the rate you are likely paying the creditor now. Also, there are new proposals to adjust the interest rate on judgments in Illinois in certain circumstances.
If the creditor obtains a judgment, it may be that any payment terms you are able to afford are less than the creditor will accept. In that event, the creditor is most likely to garnish your wages or try to attach your property (such as money in bank accounts or even personal property). I expect in your circumstances that other creditors seeking collection is likely. You should consult an attorney regarding bankruptcy options, even if you have filed before. Even if you own a home, cars or other assets, bankruptcy options may exist to help you on the road to financial recovery.
Finally, debt collectors often overreach. The Fair Debt Collection Practices Act may afford you rights if the collection efforts have violated the law. An attorney can review the documents you have received and discuss the nature of the calls you have received to consider appropriate action.
Your question involves more than can be discussed in the limited space and time of this site and requires an attorney to consider more information from you. I suggest you call an attorney with experience in the above-discussed areas.