Bro,
Here's a few things in point form that could be useful.
1. Yes, they can sue you to claim their asset (your liability) as many above pointed out. But likelihood of that is close to zero. The overhead for the credit collections to take you to the court would probably be more than $500.
2. You should not have abused your credit card facility. This ruins your credit score that will most certainly mean that you will not be able to obtain further credit, eg. mortgage, car loans, personal loans etc. Your best option would then be Dhukuti or Dhikuti or some crap like that, which some ancient folks from Nepal seem to get fixated upon.
3. More important question is: Now that you have screwed it up, what's the best course of action? Obtain your credit history from equifax/tranunion etc. and check what has been reported already. If it looks pretty f..ed up already, I sugget you do not pay a single cent as it is not going to help you with your credit score. Only if the collection agency cleans it up first, then you offer to pay up.
4. As someone pointed out, it does not take decades to reset your credit history. It takes about 6-7 years. So you will have another shot at building your credit history again after that time frame. But you can forget about any major purchases during that time.

5. Always remember the limit in the credit card is not your property or your inheritence. It's a loan that you have obligation to pay back. It's morally wrong to steal money from others.

Hope this helps...