Yes, a debt collector can sue a borrower/debtor in court on behalf of a creditor to recover money that has not been paid. A debt collector cannot outright threaten the borrower of legal action during the recovery process, however he can amicably explain the steps he may take if the debt is not paid off, especially if the borrower asks what steps will be taken next if the amount is not paid off.
There are several factors that play a huge role, whether or not the debt collector can go ahead to the court or not.
1) Does the collector have sufficient documentation to prove that you indeed owe the debt and how much. Do not ignore a court notice, because if you do not go to court the judge may pass a default judgment against you. It is the borrower’s/debtor’s right to ask the debt collector for the backup documentation.
2) Depending on which state the debtor resides in, there are laws that prevent a debt collector from suing a debtor after a certain number of years. These are called the Statute of Limitations or in other words, how old is the debt? For example in California, if a debt is more than 4 years old a debt collector cannot sue the debtor in court.
Also, there are different time limits if there was an oral contract or a written contract, or promissory note, or an open-ended debt like the credit card debt.
A debt collector can continue to attempt recovering money but he cannot do much beyond that once the Statute of Limitations ceiling hits. Therefore most debt collectors will not even attempt to recover money if a debt has crossed the Statute of Limitations.
There are many factors that can reset the age of an account, for example, if you agree to make a small payment against the debt, or sign a new contract to make the payment, then the Statute of Limitation resets. If your debt is very old, you can always ask the debt collector to check and explain to you if the Statute of Limitation has been reached or not.
3) A debt collector will typically not sue until a debt has been over 180 days past due for medical bills and 120 days for non-medical debt. Patients get a 180-day grace period to resolve their medical debt before it shows up on their credit reports.
4) A debt collector may attempt to add his court/lawyer fees and interest on top of the original debt owed, however it is up to the judge to approve it or not.
If you indeed get sued then do appear in the court and if you think if any of your legal right (like the FDCPA laws) is violated then fight against it.
Again: Once a debt collector sues the borrower in court, it is important for the debtor to respond to the notice or appear for the court hearings otherwise there is a high possibility that the judge may pass a default judgment in favor of the creditor/collection agency. Failing to appear in court is a huge error and can be a costly one.