Protect America Lie, and Cheat Round Rock Texas

We came into a little money, and decided to get a home security system. I made the mistake of signing up with Protect America. I was lured in by the statement of "free equipment"

I became self employed as a new company. We got nailed by the automatic renewal once.We were also trying to consolidate and change banks , and had asked to mail checks instead of electronic debit (EFT)to our account. We were told several times that they would only accept the EFT. We finally got the account canceled, but they kept trying to collect on the remainder of the year.
They added interest and penalties till the approximate $90 became $150. The phone would never stop ringing.
They finally turned it over to their collectors Anderson, Crenshaw & Associates L.L.C..They were demanding over $600. I sent them a cease and desist letter. I contacted Protect America. They said we could mail a check then threw a fit when we mailed a cashier's check for the $150 that they would let us settle for. They were saying we could only use a credit or debit card. After several minutes arguing over the phone they finally accepted the check. I believe this is only because they had it in hand at the time.
That was in june of 08, now in September, Anderson and cohorts send me a letter demanding almost $500.
I called Protect america back last night and they claim I have 2 options.
Option 1. Pay Anderson, Crenshaw & Associates the money they want.
Option 2. Sign up for a new contract with Protect America.

I feel they are working together to separate me from what little money I have left. My business failed earlier this year, mostly due to fuel costs. (diesel was over $4 a gallon, and the companies I dealt with were very slow in raising what they paid me.)

Victim
Aberdeen, Idaho
U.S.A.