Yes, a bank or collection agency can take you to court, but it is not a criminal proceeding: they are suing you. It varies from state to state and country to country, but you should know right off the bat that it is not a crime to owe money to institutions that you can't pay.
9 times out of 10, for an amount as small as you mentioned, they won't even bother. They threatened you with lawyer fees, but you have to remember that they have their own lawyer and processing fees to consider. This is a large bank that doesn't go to the ends of the earth to get every cent owed to them, but is always considering the bottom line.
A typical court procedure is that the bank sues, you don't show up to defend yourself, the court rules in favor of the bank and orders you to pay up. Depending on the severity of the case and the court's mood, they may order you to pay the bank's court fees and have your wages to garnished (up to a certain percentage as allowed by your local government). It is extremely rare for a court to order property seized unless your debt is on par with the value of said property (i.e. you owe a hundred thousand dollars and you happen to own land).
Finally, if the case is really that bad, there is always another option: bankruptcy. filing for bankruptcy protects you from debt collection, wage garnishing and property seizure. When the procedure is through, your debt is wiped clean and you begin rebuilding your credit.
My final advice is this: get a professional opinion. Debt law is different everywhere, and maybe you live in some backwater state that thinks people in debt are scum, but probably not. Don't listen to people who say you deserve everything the bank does to you. Being in debt is a serious problem for most Americans, rich and poor, but there are second chances. There are even programs in many states that offer free debt counseling. Visit your state or municipal government websites or call them and ask.
Until you are actually officially sued, don't worry about court.