Well, beings the loans were illegal to begin with about all they can do is threaten you. They can't hardly walk into a court room and try to collect on an illegal debt, BUT, they will threaten to do so (All BS). Tell them they are trying to collect on an illegal debt, send them your state laws, link below. For a detailed answer - CLICK HERE to find out how to deal with illegal lenders.
Link below for payday loan laws. Pretty clear cut.
http://www.paydayloaninfo.org/state_detail.cfm?id=NY

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Yeah, that is pretty much what i figured a lot of BS and scare tactics. When i told them they where trying to collect on an illegal debt, they got very very rude and simply said, it will get handled one way or another.

Don't be surprised if they threaten you with a summons, but that's BS also.

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Online Complaints Ohio Attorney General
Online complaints: Federal Trade Commission.
Ohio Payday Loan Laws
CLICK HERE to find a Creditor

I figured that they would probaly do that as well, i feel better now, it's funny how a legit collector is easier to deal with than a bottom feeding debt buyer. If they report it on my credit report, do i have a legal recourse?