How do I resolve a bill for a stolen phone that has gone to a collection agency?

I lost my tmobile phone in jan 2008. I called the next day to report it probably lost. I was told I couldnt suspend it, the only option was to cancel account and get new sim and number. I was not notified of fraudulent call activity that was already underway with calls to middle east at this time. I called back the next day after backtracking and not finding it to cancel it. Fast forward 6 weeks I receive a bill for 1000.00. Call to question it, am told that I am responsible since I didnt immediately cancel. I write to customer service disputing this, and receive response saying, you must pay. Bill went to collection agency. I left country for 2 years. Am now back and need to fix poor credit rating this has caused.