Are you sure your being sued. Some if these collection agencies have gotten very crafty and can lead you to believe your being sued when really they are just trying to collect a debt. Unless you have actual court proceedings in your hand with a case number that can be verified you may not be getting sued yet. If you are it's probably best to pay it and fight to get your money back. But Seeing that it's only $500 it's probably not even worth fighting for.