Incarcerated for 8 months. During this time one of my credit cards referred me to collections. Is this legal?

I was incarcerated for 8 months during this time one of my credit cards turned me over to collections. 1st is this legal? I had no ability to pay while in jail. I have been out a few months now got a place and slowly putting my life back together. I have contacted all my credit card companies and the collection agency I was reffered to. I have made payments to all of them. Including the collection agency last month I paid them $500.00 and I told them I would try and pay another $500.00 this month. Now they will not accept it they want the whole amount or there going to sue me. I don't have $8,000.00 to pay them off until a settlement is reached in my divorce. Hopefully at the end of this month? The point is, I had no ability to pay then, now I have limited ability to pay and I am paying. I have been told that while your in custody an inmates financial obligations are suspended for how long I don't know? What can I do? I want to pay but they want a lawsuit?