New York debt collection law, debtor's rights if cosignor files for bankruptcy

3 years no notice:: 3 Year old debt: I had a cosigner on a vehicle being financed. After graduating I was unemployed for a few months and my payments were late ever other month for about 5 months but paid. My cosigner filed for bankruptcy and listed the vehicle under the bankruptcy agreement. After her BK was succesfully completed the financing comany contacted me and ask me if I wanted to keep the car or give it ip. I opted to give it up. Once they received the vehicle, I received zero correspondence of any sort about the vehicle or for payments. This was in 2005. Now in 2008 I received a call saying I owe $5300, which is the difference after the vehicle was sold in an auction. The call to me was made on a monday requesting payment by that wednesday. The company informed me that if I didn't make a payment they will start processing what I assume will be a litagation. Of course I could not make such payment. What am I in for, and do I have any rights being that I received insufficient notice of this debt?