If I've understood you correctly, you returned a cell phone for repair 6 weeks after getting it, they couldn't repair it, they didn't give it back to you, or give you another one, you're stuck with the contract fees for a service you didn't get to use because you didn't have a cell phone, and now they're sending a collection agency after you for them. That right?
I hope you kept the paperwork you got when you bought the cell phone and signed the service contract, and any additional paper afterwards, like correspondence you had with the vendor when things went wrong. That's your only chance. The law's view generally is that if it isn't in writing, it didn't happen. There should have been a least a minimal warranty on the cell phone itself, and it certainly should have been longer than 6 weeks. Most such warranties state the vendor will repair or replace the item, at their option, within the warranty period. They did neither, so you might have a Small Claims Court case against them. There's probably no recourse on the service contract though. It's unlikely to say anything about whether you're able to use the services or not, or have a cell phone or not, all it'll give you is a certain amount of air time at a certain cost, and whether you use any of it or not you still have to pay.
Buying the cell phone and the air time are two separate transactions, though that's rarely made clear at the time of purchase. Any service provider will happily sell you any amount of air time you want, and won't care whether or not you have a working cell phone that enables you to use it. You may be stuck with that one. Chalk it up to bitter experience, next time read the paperwork carefully, and deal with somebody else. On the other hand, this is really bad PR for the vendor (not that they seem to care much about that kind of thing), so you might get some satisfaction by going public with it and trying to embarrass them into treating you decently. But you'll need a very thick skin and a lot of determination to pull that one off. I'm sure they've got lawyers whose sole responsibility is to piss off people like you.