CASHCALL SUING ME FOUNTAIN VALLEY California

I need some help, I went to a loan company to borrow some money so that I can pay some bills off. Apparently they put up my credit report and saw that cashcall was one of them so they paid them off the whole loan which was 2,583.00 and that was in 12/05 then they sent my a letter on 9/06 loan modification agreement-deferment..I call and ask what this is for..they haven't received any payment I told them I did pay the loan off...no record, now this attorney is telling me if I don't put money down they will take me to court...and I told him ok,so I gave him my bank information, he said that if i don't have enough funds he will take me to court.I got copies of the check that was made out to them and also shown the back that they did cash it, my loan officer told me let them take you to court because I have proof that it was paid off...they got the amount left from my credit report and also told me that they can take my car away..but the car isn't mine I just co-sign for my daughter so anyone help me out what should I do..I want to put this people out of business..they high % rates...Please help me am looking if i loose I'll be paying over 8000 court fees...any attorney out there can advise me for free.

Mahalo

Kapio
San Jose, California
U.S.A.