Based on the circumstances you have described to me, I would agree with you that the repossession of your vehicle and the claims made by the lender after the repo were at least wrong, if not illegal.
What they are attempting to collect on, however, is called a deficiency balance, which is typical after a repo when you still owe money on it.
I cannot say specifically if the lender broke any law, as the laws regarding repossessions vary significantly from state to state.
I encourage you to seek the advice of an attorney to discuss this repossession, applicable law, and your rights in this situation. A consumer rights attorney in your state will know if the lender acted within the bounds of the law, and what recourse you have if any law was violated. If you do not know an attorney with whom you can discuss your problem, you should contact your state or county Bar Association's attorney referral service. These services allow you to describe your legal needs so they can refer you to an attorney with experience in the area in which you need assistance. An attorney can advise you of your rights, negotiate with your former lender to resolve their claim, and, if necessary, file a lawsuit against the creditor in an attempt to resolve this problem.
I wish you the best of luck in resolving your financial problems. I certainly hope that you are able to resolve this claim with the lender, be it in court or out.
I hope that the information I have provided helps you Find. Learn. Save.