Talk to a lawyer ASAP. In a situation like this, every day of delay in hiring a layer can cost you big bucks down the road. Do not rely on any Internet forum in a situation of this kind, talk to a lawyer ASAP.
Yes, hire a lawyer! I got stuck with a huge CC bill after my divorce. I couldn't afford the montly payment, and the CC would NOT work with me. They sold the account
to a law firm/collections agency. They sent me one of those dunning letters, so I immediately sent them a debt validation letter via certified mail. In my letter, I requested validation of the debt and a copy of the account application (long story - my ex opened the card in my name and signed my signature on the application). They are supposed to respond within 30 days...but they didn't. Instead, I got a summons. I immediately hired a consumer advocacy attorney - not only did they reduce the debt by half - they also removed the account from my credit report. They could not produce the application, and they knew they were in violation due to NOT validating my debt (that's a $1000 fine) so they were willing to work out a deal.
OP, can you offer them a settlement in full? You might be able to work out a deal with them if you can pay it in full - maybe even for a reduced amount - and you can ask them to remove it from your report too.