You should request verification in writing. Payday loan companies make bogus threats all the time. Make them prove to you that you own them the debt.
Consider the value of getting a free bankruptcy consultation if you have other debts and are feeling stress over them.
I agree you should request this place to send you something about the debt in writing.
If they sue you in district court they will have to serve you the documents personally, or at your home. So you will get notice.
Also, know that social security income is exempt and can not be touched by creditors.
Based on what you've written it sounds like they've made a few violations on the Fair Debt Collection Practices Act (FDCPA (calling family members, lying about legal action), which would subject them to suit. However, the bigger questions is whether the debt is legitimate, and for that you make written request to verify the debt. If you know going in that the debt is legitimate, it may be worth making a settlement offer to at least stop the calls. Alternatively, I agree with Mr Eblen that a bankruptcy consultation may be worth considering. There are a number of good bankruptcy attorneys in Tacoma, or you can feel free to give me a call here in Federal Way.