It's simple blackmail tactics that the collection agency is trying to use in order to force you to pay something that you don't legally (but might morally) owe. You're right about the "hard" inquiries on your file lowering your Beacon and TransRisk credit scores. That's something that Fair Isaac harps on a lot. You need to call/write Equifax and Transunion, explain the situation about the statsbar on the TD loan and try to get the hard inquiries removed. They're both sticklers under the CRA act for documentation so it would really help a lot if you had any correspondence regarding the loan from the banks or the agencies. Otherwise, it can be difficult if you get into the reverse onus position of having to prove the loan is stats barred.
or more than 6 years in default. The TD bank and the collecors won't help you in this regard since they would be giving up their only leverage on you. That's why I always tell people to save their old account statements until it's certain a loan is SOL.
Conversely, if you're missing all the documentation, the bureaus may demand the agencies send them in proof the loan has not been in default for more than 6 years. Anyhow, you need to contact Equifax and TransUnion and start the process. The people working there are helpful and competent generally but it may take more than one try to resolve things.
You might also want contact the 3rd CRA in Canada, Northern Credit Bureau run by Experian (and trying to expand into Canada like Hell's Angels). Like the Hells, they also make collections just slightly more gently. In fact, it seems like the the small credit bureau they have going is just a leverage front for their collection arm. They're located in the god-forsaken place of Rouyn- Noranda of Northern Quebec, home to the world largest mosquito herd - something I can attest to from my old black bear hunts. Call them also if you want. Let me know if you have trouble with the phone numbers.
Ray