Then I would agree with you under the facts that you described.
As such, I would inform the collections company that if they continue to send you threatening letters or any type of communications you will file a harassment complaint with the police AND with the courts against them.
To, I would inform them that if they do file suit against you in the matter and that the case is dismissed - you will file a malicious prosecution suit against them.
An action for malicious prosecution has three elements. The plaintiff must establish that the prior underlying action (1) was commenced by or at the direction of the defendant and it was pursued to a legal termination in the plaintiffs favor; (2) was brought without probable cause; and (3) was initiated with malice. (These are the elements in all malicious prosecution cases.)
Plaintiff must therefore present evidence to satisfy three primary elements of the malicious prosecution cause of action:
1) Probable Cause -- The California Supreme Court employs an objective test for determining probable cause, i.e., whether based on the facts upon which the attorney acted would lead a reasonable attorney to believe that the action was tenable. (Sheldon Appel Co. supra,47 Cal.3d at p. 878). This element is decided as a question of law by the court. The attorney defendant and the client may not be aligned on this element if the client asserts the "advice of counsel" defense. This defense waives the attorney-client privilege regarding communications between the client and the attorney on the advice given and relied on.
2) Malice -- Plaintiff must plead and prove either ill will or some ulterior purpose distinct from that of enforcement of the alleged cause of action. (5 Witkin, Summary of California Law 9th Ed 1988 § 450 p. 534, citing Restatement 2d. Torts, 676.) This element is a question of fact.
Here it's economic extorsion - that theythink they can just buffalo into paying them for monies you don't owe.
3) Favorable Termination -- It calls for a termination reflecting on the merits of the action and the plaintiff's innocence of the misconduct alleged. (Lackner v. LaCroix 1979) 25 Cal.3d 747, 750-751; Pattiz v. Minye, 61 Cal.App.4th 826-827.) When the termination of the proceeding does not obviously reflect on the merits, the court must examine the reasons for termination to see if the disposition reflects the opinion of the court or the prosecuting party that the action would not succeed. If resolution of the underlying action leaves a residue of doubt about the plaintiff's innocence or liability, it is not a favorable termination sufficient to support a cause of action for malicious prosecution. (Id.at p. 827.)