I am trying to buy a house and have been paying my credit cards down, only have a 130.00 left to pay on a credit card, now I received a letter that a lawsuit has been filed for a medical bill that I did not pay, does anyone know how this will effect me in my house buying, I want to try to ask the creditor if I can make monthly payment in exchange for dismissal. I have not been served yet but a card has been left on my door,, help

A judgment will have an affect on your credit rating. So it would behoove you to negotiate a settlement with the creditor.

If I negotiate a payment plan, will it still go on my credit report, could I also negotiate with the creditor to dimiss the lawsuit in exchange for payment, I am trying to buy the house within 2 months

I would assume that a non paid, late pay doctor bill is already on your report and it has a negative effect. A judgement will do a lot of additional damage already.

Next not to sound mean, but you have just paid off a credit card, and need to pay off a medical bill, where is all the money you will need for a down payment, In today's market you will need at least 10 percent and most likely 20 percent of the purchase price.