Tomorrow when i have calmed down and i'm not so emotional i will call them back and ask to speak to somebody high up whos not in the collection department about my options. And if they still wont hear it i will take it further.
This is the part that concerns me. The rental company holds all the cards (and rightly so) due to the contract you agreed to. The higher they allow you to go up the chain, the less that person is probably going to care because the senior staff will have more pressing matters than your $600 debt. "Taking it further" and all of that is just denying the issue.

I hope you can work it out, and like the others have said, you guys really need to see a financial counsellor. Failing that, for all future transactions - if you can't pay for it outright, or can't clear any agreed debt very quickly, do not purchase. By that I mean, we use credit all the time for big purchases, but also have the capacity to pay it off quickly too, meaning that credit gives us the convenience to get something immediately, but also doesn't put us in a situation where we are burdened for a long period. I personally believe that if anything involves a contract over X number of months or years you shouldn't do it, barring perhaps a modest mobile plan.