Old PDL sold to Lighthouse recovery.. being threatened.

I got a call last night at home and at work from JC Mack from Lighthouse recovery. I called back today and spoke to Bob Barry. I was told that I owe over $1000 on a PDL that they purchased from the original creditor, Cash first. The principal was $480.

I live in the state of NY, and to my knowledge, PDL's are illegal in NY. The guy I spoke to, Bob, said that he knows full well the laws on NYS and that regardless, I would go into arbitration and have to pay the full amount. Is this correct? How can I go about stopping this? As I am sure is the case for most of us, I am in a very rough financial situation and cannot afford to go thru arbitration, let alone pay over $1000 on a loan on $480.

I called the NYS Atty Gen. office and they told me to file an internet based company complaint form, but I did not deal with this compnay over the internet.

The guy seemed nice and was willing to accept payments of $25.00 every 2 weeks, but I don't feel I should have to pay what he is saying is the total balance.

Any advice?

Also, he asked for my work info. I didnt give him an address, but I did state the name of the company. Clearly he already had the info because he called me at work, and not on my direct line's number. Should I advice my HR dept that this comp might be trying to collect from my wages, and that it is illegal for them to do so? What are my next steps?