Car Issue

I financed a vehicle through capital one auto, i got laid off several times so I was late making payments a few times but I still maintained the car note payments. I finallally paid the car off in 2011 and just went to purchase another vechile when i found out that capital one had listed the car as a repo on my credit report with a 14,000 dollar balance. I contacted them and the nasty recovery dept agent Markus explained in a mean way that because I ran almost 4 mths late in 2007 that they charged off my car. So I asked him how could they do that without at least notifying me, they said they did not have too. I still got a bill from them every month for my monthly payment which I paid and once payments were completed in 2011, I received title. I can they do that??? This is so illelagle. Because of this it is ruinning my credit to purchase another vehicle. Can they do that they are reporting me incorrectly.