Midland Funding, LLC MCM, Stelios A. Harris Unfair Legal Practice - Filing Default Judgement without Cause San Diego, California

I received a Plaintiff's Notice of Change of Address from Midland Funding with a Case Number.  I was not aware of who they were and what they were filing for as there was no information in the documentation regarding what the suit was for.  I contacted them and they stated that it was for a debt collection on a Visa card.   I sent a letter requesting verification, which they responded to and verified that I owed $1500 (including interest/penalties) for a past due Visa card.  I contacted them again and offered to make payment arrangements, starting August 15th at $100/month, gave them my credit card number and they have been taking $100/mo out of my checking account on the ever since.  I was told that no further interest would be charged and no further legal action would be taken, while the payment arrangements were honored.  I was also told that I would recieve a package with the payment agreement in it that I needed to sign and return.  I received the packet, but since an agreement was in place and timely payments were being debited from my account, I did not open it right away.  I just received an Entry of Default from them stating that I now owe them $2047, including legal fees and interest which amount to over $800.00.  When I called them today (12/29/11)  they stated that my payment arrangement was contingent on me signing a Stipulation for Entry of Judgement back in July, which I would never have agreed to and was not explained to me when I called in July and set up the payment arrangement by phone.  Today they stated that the documentation said  that if agreement was not returned in 20 days, it entitled them to proceed with litigation even as they continued to debit my checking account for the agreed $100/mo. on the 15th of each month.   I told them that I would never have agreed to such a payment plan that would put me in default, if I was making payments as agreed and was not in default.  They now say that they will go over their recorded calls with me to prove that I agreed, which I know that I did not.   My understanding was that if I paid them as agreed, that no further interest or legal action would be taken, now they are taking on an additional $800 that I did not agree to pay.