Wow, that sucks. And it's not that uncommon, unfortunately.
I think it's up to you whether or not it's worth the hassle. There is some chance that they may come after you again in 5 years even if you DID pay it, because the paperwork may get lost, etc. In any case, I would write a letter to all three credit agencies with what you've written here. Your letter can be appended to your file.
Any conversations you have, document thoroughly, and keep them organized. Record who you talked to, dates, etc.
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