If this debt collector is telling you they are going to sue you to get a judgement against you,they have broken the law and you entitled up to $1000.00. Debt collectors cannot sue nad claiming they will is a misrepresentation. Debt collectors are strictly regulated by a Federal statute called The Fair Debt Collection Practices Act. This statue is hyper technical and any violation results in a fine payable to the debtor. Moreover, the Act provides for fee-shifting. By that I mean the debt collector will have to pay the attorney's fees in getting you the fine. I routinely get $350.00 per hour awarded to me by the Federal Courts. Find a lawyer who does consumer law, most lawyers don't handle these type of cases and the learning curve is steep.
The payday lender can file a lawsuit against you. If they do please have a lawyer respond to it and do not ignore the suit. You may only have 20 days from when you receive the suit. Don't waste that time.