Cash Call / Four Season Cash / etc..

I got a PDL with Cash Call (Western Sky is who I contacted but was told Cash Call managed the account) and paid 896.82 to the loan that was a principal of 2525.00 then I found out from this site that they where not legaly elidgable to issue loans in my state, (Virginia). I sent them the letter from this site explaining that I know knew the loan was not legal and I wanted to make arrangments to pay pack the principal. They respondend once saying I made a legal agrement with them and they tried to take additional payments out of my account even after I notified them verbally, in writing, and in email they I revoced their right to take automatic payments from my account. They kept trying so I had to actually close the bank account. They refused to discuse any other payment arrangments other then to pay the full loan amount and fees now. This was in 6/11/2012. About once a month now I get an email from "Dilbert" now telling me they will settle the account for a one time payment of 1999.00 but no other payment options.
Today a new place called me saying that the loan was with Four Seasons Cash (never heard of them) and their company Searey now owned the dept. When I told them I didn't know who Four Seasons Cash was they gave me the bank the loan was originally deposited to and the name of two people I think I used as referances as well as my address. Now they say they are reporting me as refusing to pay the debt and bouncing a check with them to my local county court house. When I told them I needed a collection letter they said they sent it already and gave me my address. I asked for a copy of the original loan documentation and they refused saying I would get it after they reported the case to Hanover County. I also see Cash Call has slammed my credit rating and put on there my PDL and show it in default, (I didn't think PDL's could report to credit services)
Can they really do any of this? What should I do next? Thank you all for your time.