Yes, it is true that a creditor can take you to court to try and collect on a debt.
However when you look at the sheer volume of people who go behind on their credit cards, proportionately very few accounts actually go to court. Anyone who is behind with their creditors can receive papers to go to court as long as it is within the statute of limitations of their state, which is on average between 3 and 6 years.
You see, it costs a creditor a good amount of time and money to take you to court for credit card debt. They have to find a firm firm in your state to serve the papers, and of course they will pay legal fees to be represented in court as well as filing fees etc. Even if the creditor does try to take you to court, that does not guarantee that the creditor will get paid. First they have to get a judgment.
The first step in getting a jurisdiction is to get a lawyer to serve you papers at a local court. You then have the option of responding, OR showing up in court, OR doing nothing.
THE WORST THING YOU CAN DO IF YOU ARE SERVED PAPERS, IS TO IGNORE THEM AND NOT RESPOND.
If you do not respond, the creditor gets a default judgment. Basically, because you do not show up, you're guilty. The creditor receives the judgment and then has one of two options.
Option # 1- In most states the creditor can try to place a lien on your house. This does not mean you have sell your house, or that you will lose it. It simply means their is now an I OWE YOU attached to the house, and IF you decide to refinance the home or sell it, the lien must be satisfied first. It is still possible to negotiate the amount of debt even if a lien has been placed.
Option # 2- In some states the seller could try to garnish your wages. While this is a possibility, the creditor still has to find out where you work, and can only take a portion of your paycheck. It is not pursued that often, unless your place of employment is easily found or already known. This is not the preferred method of collection as it takes quite a bit of time to get paid, and only one creditor may garnish at a time.
A side effect of only one credit at a time being allowed to garnish your wages is that if you receive one judgment from a creditor in court, you will most likely not receive another.
If you are served court papers, the worst thing you can do is not respond. If you are in a settlement program at the time you are served, the good settlement companies (there are about 5 in the whole country in my opinion) should have a way to handle this. If not, you should follow the steps included in the summons to respond to the matter as soon as possible.