Capquest legal action, advice needed?

I took out an account with Littlewoods in 1998. I had a perfect credit score and never made a late payment. In September 2008 I ordered some Christmas presents for my children, it wasn't until Christmas day that they were opened and we saw how damaged they were. Littlewoods said they were not responsible as I should have noticed within 30 days of receiving them, this wasn't the case as I can't open presents that I've specially bought and they knew this. A lot of arguing later, they refused to let me dispute the debt, I was paying them £120 a month for items that were badly broken.

A lot of the items they sent were also ''lost'' in transit, they were put down as 'delivered to bin' or 'thrown over back wall' which was not a safe place, they refused to refund those items either.

I went to Stepchange when I lost my job and set up a payment plan of £10 a month with them for 2 years, so I was paying off £10 and they would not freeze the interest so they were adding on a £25 late payment fee (failure to clear the balance outstanding) despite me paying on time and interest. 2 years passed and I was still in a bad situation financially so I said could I pay £30 a month, they said no we want £120. I couldn't do this, they wouldn't send me a paper bill etc and wouldn't accept that payment from me.

It got to the point where they were ringing me 19 times a day and bombarding me with letters, I had to cut all contact with them and I ignored them. Eventually after a year, in 2013, they passed the debt to Lowell, I explained what had happened to Lowell and how I was disputing the debt and they passed it back to Littlewoods, Littlewoods were not interested and wouldn't let me dispute it and I haven't heard from them since until now.

Yesterday I received a letter from the business court stating that Capquest have bought the debt from Littlewoods and are taking me to court for the sum of £2600 (I only ever spent £500 with them, the rest is interest). I phoned Capquest's solicitors who told me that they have sent me a letter 4 weeks ago telling me that I will face legal action if I do not pay, I didn't receive this letter and they refused to provide proof of postage as I am not their client.

I'm now left in a total mess, I don't have the money for this and even if I did, I wouldn't agree to pay it anyway. I'm just wondering what can I do? Capquest are a company that recover debts and have bought it from Littlewoods, I thought it was illegal for them to default my credit report as they are not the original but apparently they have done anyway.

What can I do? I'd just like to know where I stand really, I don't want it to go to court and with working full time, I honestly don't have the time for it. Sorry it's a bit of an essay, Citizens Advice have told me that there isn't much I can do as the debt is 4 years 7 months old and not 6 years. Any advice is appreciated, the court have given me 14 days to reply to them with my income and they will forward it to Capquest.. this all seems very wrong to me. Capquest have also said now they have started legal action, they won't stop it. Why do Capquest need my income if they have told me they aren't interest in dealing with me anymore?

I have no debt, this is the only bad thing on my credit rating and they have honestly crippled it. I do suffer with anxiety and the thought of physically going to court is scary enough as it is, I've been told by Citizens Advice that a hearing would be held but I would not need to attend, is this true? I have also sent Littlewoods a subject right to access to find out if they have a contract as I am sure I never signed one, I only placed orders over the phone.