Only $500? Maybe it’s a state-by-state thing, but we can sue for $1000 in Missouri. Per violation of the FDCPA. I know one guy that collected 5 grand from one company.
The FDCPA only allows for $1000 total (in one suit). States that have their own laws may have additional per-violation penalties but the FDCPA doesn't.
That said, you always sue for $1000 per violation because it looks scary and they're too dumb to know better. Make sure it doesn't go beyond the limits of the court you're suing in. Here it's $5k in a Justice Court.
If only the FDCPA applies, no lawyer of theirs is going to let them get taken for $1k per violation. The $500 is a fair compromise between nothing (if I lose) and the maximum I can be awarded.