I wouldn't say it is unwise to contact counsel for the creditor, but if you do remember that if you are able to settle the matter, make sure your agreement is in writing signed by the creditor/or their counsel and yourself and that you understand the terms. As for the lawsuit they filed against you, be sure that you file an answer to the law suit before your time to do so has expired or else you will find that the creditor has a default judgment against you.
I cannot offer an answer to your specific question but would suggest that you speak to a payday lending lawyer from Ky regarding your issue. Www.naca.net lists consumer lawyers that represents consumers only. Your question is interesting because there are payday lenders that have "rented" the charter of supposed national banks in order to evade lending laws. Contact the Attorney General in Ky, Office of the comptroller, and FTC. Good luck.
There is no typical or standard award for punitive damages unless you are in a jurisdiction that offers only a multiple of actuals perscribed by statute. Every case stands on its own facts. There are many factors that are evaluated when a judge or jury determines the amount of punitive.