You need to provide more information. If she gave you a loan for $1,200 then she can claim the right to force you to repay her even though she may be subject to other claims for money that she owes you, such as the utilities, rent, or even her share of using the car. There is no rule the prevents people from loaning each other money without a written contract as long as there is an understanding that they can demand repayment at any time. However, if she gave you the $1,200 to pay for her share of the utilities, as a gift, or to compensate you rent or other services, then she does not have the right to commence a lawsuit to demand repayment. The problem is without a written contract, its your word against hers and the amount of money at stake simply does not warrant hiring an attorney. You would be better off trying to get the claim into mediation and let a third party decide who owes what before you waste time and money hiring an attorney or fighting over a portion of $1,200.
If this was a loan you shoud properly pay it back, morally.
If this was not a loan, then you should not...
If there is NO writting at all there may potentially be a suit filed, however the individual would have to prove the fact that there was a loan. If there is ANY evidence of a loan, such as payments you have previously made, or any writting, this could be sufficient to show the loan existed.