Being sued for small claims in indiana. Need any advice..pls

In 2005 as an undergrad, i got a payday loan. I paid the extension fees for about 3 months and i was unable to pay any further because of financial problems. They try to take the extension payments several time that it landed me in debt of about $1200. The bank to me to collection and i got the debt down to $510. I called the collection agency and they refuse for me to pay a smaller amount in full, this way my account can be closed. I recieved a letter from the Marion county small claims that i am being sued. Now in this case what is the best thing i can do? Should i just find a way to pay them or should i risk going to the court? Would they garnish my wage and based on what do they garnish because i only work part-time? Any advice will be appreciated.