I have been served papers by a collection agency to pay an amount of money I don't have. My options are to pay the debt plus court cost or deny and go to court. What do I do I don't have the money?

Well you can do nothing, don't go to court, they show up and get a judgement against you for everything they are asking

Or you can show up and show the court all of the payment plans you have tried to settle with, or any settlement plans you have offered. Or show that you don't owe the money? ( do you owe it)

If you work, and live in a state where they garnish pay, if money is tight now, what happens when 1/4 of it goes to them first

If you do nothing at all, then it is likely that creditors will obtain a judgment, which is decreed by the court. It would give them the legal right to freeze bank accounts, garnish wages (if permissible in your state), etc. If you offer some kind of payment plan to the collection agency, it might at least keep a judgment from being enforced. If you have offered something and they persist on going to court, then you can at least present your financial situation and try to work out a settlement with the court's approval. If you can prove that you've been making "best faith efforts" to resolve the issue, then in some instances, court costs, interest and late charge fees get thrown out. This is sometimes, not always. Keep in mind that doing nothing will make the situation outcome better for them and worse for you. Hope this helps a little bit. Good luck!