Can a creditor sue if a chapter 13 has been dismissed? Is there a time frame? Should I have it discharged instead?

I filed chapter 13 in Dec. 2004 and had it dismissed in June 2006. I am being sued by a creditor who repossessed my vehicle after the dismissal. Their attorney told me that because my case was dismissed and not discharged that I am liable for the remaining balance. What happened to the money I paid into the chapter 13? The statue of limitations in my state is 3 years for open contracts, does this fall under that category? What should I do??? - Is this your question? Add additional information