It is hard to know without seeing any paperwork related to this debt. If there was a lawsuit filed by the creditor for which a default judgment was entered they may be within their rights to attempt to collect on the judgment. You perhaps might have a valid argument if you were not properly served, but would need to see the court documents underlying any purported judgment. If the judgment is not valid then you could seek in state court to overturn it. It is possible there isn't even a judgment and the collection agency is simply trying to scare you. As a starting point asking for a copy of the judgment from the collection agency or asking for a case number so you could call the clerk of court for the county it is out of to find out more information would be recommended. If it is a valid debt you could consider making a payment arrangement or looking at bankruptcy.