What to do in this situation?

The best thing for your credit is to pay what is owed to your credit card. At this point, there has already been some damage done to it, so the sooner you pay it, the better. I know that seems unfair, but unfortunately it's the quickest way to get your credit back in line. Keep fighting eBay, however, and perhaps your work will be justified with a refund.

Do not order expensive items from eBay. There is always that 5% chance that you get a dishonest vendor. Thank you for sharing your bad experience. I learned about dishonest vendors by ordering inexpensive items. 95% of the time my eBay buying has been positive. But there's always that 5% of the time that worries me. So sorry to hear about your experience. I would continue to appeal to eBay on the basis of their reputation. Also have a lawyer write a letter.

bring up a civil-obligation case, not a criminal one, to push the guy to pay you the amount...i thinks its in the constitution of obligations and contracts

Unfortunately time is against you in this situation. Since it's already been put through to collections, there isn't a lot you can do. When collections takes over an account, the original business (your credit card company) has sold your delinquent account to the collection agency. While some companies have an in-house collection agency, most don't. Most collections are independent businesses that buy accounts off businesses. At the point the collection agency buys the account, it's no longer the original business' problem. It's a closed deal for them, so trying to negotiate with them is pointless. Collection agencies are there simply to try and harass people out of past debts. It's all numbers on paper to them; they don't know the history of the debt or its validity, nor do they care. Trying to talk to them about your problem is even more pointless. At this point your best bet would be to try to negotiate a discounted settlement price with the agency. They *will* settle for a lower amount, even half the amount they quote you. The reason: They paid a ridiculously low amount for the rights to the account. They've then padded the amount you owed to the original company with their own fees - sometimes 2x or 3x the amount owed. So of course there's room for them to come down in price if it means getting any payment out of you. A word of warning: If you do negotiate a settlement, GET IT IN WRITING. I cannot stress this enough. And never pay over the phone. Get them to send you a revised bill with the amount negotiated on it and pay it with a check. If possible, photocopy the check before sending it as proof of payment that you can match up to your bank statement. Also keep a copy of the bill that has the settlement amount on it. The reason for this is because if you don't have these things on record, the collection agency can and will sell the remainder of the amount you didn't pay on to another agency who will then try and extort even more money out of you. A worse-case scenario is they will sell the full amount they originally asked you for, without record of the payment you made at all. If you can't prove you paid and negotiated a settlement, you're stuck. When this charge-off hits your credit, dispute it. If you can't get the item removed from your credit make sure and note in detail what happened.