Collection Agency Question

I also was recently informed of an apparent debt that I owed Bally Total Fitness Corp for $2,700 from 2001!! I had signed a 1 year contract with them (at the age of 19) and was then sexually harrassed by one of thier employees on two seperate occasions. I contacted customer service and they told me to write a letter to request termination of my account stating every detail of what happened. i did so. i also moved at this time, never, EVER assuming that a corporation that big would do anything but grant my wish for termination under the circumstances. last year around this time, i pulled my credit report for the first time in my life. to say the least, what i found was that my balance with ballys had tripled (from late payment) and was then sold to asset acceptance collection agency. i wrote a debt validation letter to asset who never responded. i wrote to every single credit bureau with copies of my proof that this company did not validate my debt at all, let alone in the time frame in which the law states they have to. it was then that asset acceptance validated my debt with the bureaus and, at the age of 25, i am being held responsible for this absurd amount of money in this ridiculous situation, which is not allowing me to build my credit the way i need to at this time in my life! i gues what i am asking now is, what's next? i have been told to "settle" with the collection agency but i do not know how exactly to go about it. i have heard i could request settlement for significantly less?? any advice would be greatly appreciated :) - meredith