CAN AT&T REALLY DO THAT?

i recently lost my cellphone and went to replace since i had insurance well they told me that i didnt have it when i know i had it added but since i did it over the phone i had no proof...well i told them to cancel my plan since im so sick of their rip off anyways...well they didnt cancel and kept sending me bills for monthly payments that i never used any minutes for since i dont have a phone....so i call them and they tell my that i am responsible and theyll turn me over to collections if i dont pay...$175.oo for early termination and $220. for last three months bills....please help!!1