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In 2012, I entered into two credit agreements. Unfortunately, due to unforeseen challenges in the subsequent years, meeting the repayment obligations became difficult. In 2014, I relocated to the UK and sought to establish a debt management plan to settle the outstanding balance. Regrettably, viable options were not presented to me at that time.

Upon my arrival in the UK, I faced challenges with credit agents who were uncooperative in accommodating my new contact information and insisted on full payments, which were unfeasible for me at the given circumstances.

Despite my efforts to engage with credit agencies and establish a manageable repayment plan, communication ceased in the subsequent months and years. Consequently, I assumed, perhaps erroneously, that the debts had been written off.

Unfortunately I don't have any documentations or proof to show I have tried to mitigate and settle the debt at that time.

To my surprise, in 2022, In Romania I received communication similar to a County Court Judgment (CCJ) in the UK for both credits, without any prior letters of engagement. Swiftly, I took action, ensuring that I promptly and fully settled the outstanding amounts. Subsequently, the associated files were successfully closed.

Will this affect my citizenship application which I want to submit this month (03/2024)??

Difficult to know exactly how your application will be affected, but my instinct is it will be. I would speak to an immigration solicitor and get professional advice on how to present the facts and evidence.

My instinct tells me the same. Looking at the difference between the date of credit and date of settlement might suggest that I intended not to pay the credit back. Which is a big problem regarding my Good Character requirements.
However that isn't completely accurate. Me being in the UK made correspondence difficult and when the credit agencies saw that I am not in the country have stoped chasing me for it.... maybe they believed it would be a waste of time and put the file on the back burner.
However their conditions were not feasible at that time.

Also because I didn't received any correspondence from them I thought maybe the debt would be written off after a few years but very late I found out that has to be done in court. Calculating court costs later on I realised it was cheaper to pay the debt back.

It's a bit of a grey area. However, that is my only red flag on my application. Otherwise for the past 10 years I am proud to say I have been a great foreigner in the UK. Full-time work, no penalties, volunteering and my baby daughter is a BC.

I would hope for them to put this in balance and not only focus on my past oversight

I will talk with a solicitor on Monday but this all I've been thinking about for a week. Drives me crazy.

I wonder if anyone else has been through a similar situation and had a positive or negative outcome.

I doubt this is a common occurrence. It is up to the HO how they interpret this, a CCJ on your record isn't a minor factor. See what the solicitor suggests, if you only settled the debt recently it may be a possibility to delay your application for a few years and in the meantime do volunteering work to show you changed your character.