Barber said she was "shocked" at how Cutler had "belittled" the work done by her eponymous agency.
Several newspapers including The Sun, The Mirror and The Metro reported this weekend that Claire Barber PR has taken Cutler to the small claims court to retrieve £6,687 the agency says she owes. Cutler did not put in a defence to the court and now faces the prospect of a visit from bailiffs.
Barber said her agency had been hired for £550 a day to get Cutler on TV shows like Good Morning Britain, This Morning, and even Celebrity Big Brother, billing her for 14.5 days work over four months last year.
But, quoted in The Metro, Cutler said Claire Barber PR was appointed to help her launch a charity. Cutler - from Gateshead, who was dubbed the 'Angel of the North' by some media outlets - also alleged that she never signed anything.
Cutler, 23, told the Sunday Mirror: "The court wrangle has been such an ordeal as I have had to think about what the bailiffs could take away.
"And the worst part is that my little girl has just started school and I don’t feel like I have been there for her," she went on to say, also saying that she had given up plans to set up a new charity to help raise money for other people.
In a statement Barber, who heads the two-person agency and works alongside her daughter, said: "Katie Cutler employed Claire Barber PR to handle her PR in March 2015.
"We worked together for four months achieving blanket bespoke PR coverage across almost every national newspaper, multiple TV news channels across the north east and UK including Sky, ITN, ITV, the BBC and Channel 4, Radio 2 and an exclusive negotiated interview on ITV This Morning that took a considerable amount of time to set up. Also hundreds of e-mails, calls and planning.
"It was an enormous amount of work with phenomenal success. Katie made two payments in June 2015, then proceeded to write all over social media her shock at getting our bill (which was agreed prior to any work undertaken).
"At this point we offered her a payment plan, but she wouldn’t respond to anything. As a small family business with an impeccable reputation and after over a year and still no payment, we had no choice but to go to the small claims court.
"Katie didn’t respond with any defence to the small claims court either, other than acknowledgement of papers. We are a small, hard working company and we are simply not able to carry this debt.
"We are incredibly shocked with the way Katie has belittled our hard work and devotion to the four-month project that Katie commissioned us for."
Asked if she was concerned about the impact of the episode on her own reputation and that of her agency, Barber told PRWeek: "No, because the people who know our agency know we have an impeccable reputation."
She said clients, journalists and "multiple PR companies", many of whom she did not know, have been in touch to offer support. "It's very encouraging. They say they find it incredible that people believe in 'PR for nothing'.
"We are PR professionals and we deserve to be paid."
Barber added: "This will give me invaluable experience for our clients. I can offer a new side to my business because I know what it's like to be trolled and I know what it's like to be exposed unfairly."
Cutler hit the headlines last year after she started a campaign to raise money for Alan Barnes, who is registered blind, after he was mugged outside his house in Gateshead. In the end £330,000 was raised to buy Barnes a house.
Cutler was awarded the British Empire Medal in the Queen's Birthday Honours last year for her work.
A Go Fund Me page has been set up to raise money to pay Cutler’s bill to Claire Barber PR. It has raised £2,100 at the time of writing.
Claire Barber PR has worked with high-profile figures including Ant & Dec, Alan Shearer and Lee Westwood.
PRWeek was unable to contact Cutler for comment.