On point #1, I can assure you the actual person / officer who witnessed you sign for a loan does not have to be present. In fact, the vast majority of debt involves no such person - a lending contract is often undertaken electronically. What they will show is the contractual agreement of terms with your signature (physical or electronic). The original lender will not be there and in fact no longer "owns" the debt, having sold it to a collector. Even the collection agency won't be there, they generally hire someone locally (you must be sued in your location, not theirs) to be present in civil court.
On point #2, also false. Bad debt impacts your FICO score - often severely - but that impact is lessened with time. A 90-day or 120-day late (effectively a charge off) can ding a score 20 - 150 points easily depending on other credit factors. Shrugging your shoulders and saying "this won't be that bad" is not a good policy. While the record is not "permanent" (7 years for standard debt, 10 years for bankruptcies), they can have a significant impact.
Of course this is only my personal experience, your mileage may vary, but I just checked my credit report and the loan I defaulted on less than 5 years ago is not on it. At all. The single blemish is a department store credit card payment marked 30 days late in 2012.
This is after 3+ years of daily collections calls from half a dozen companies pursuing a high five-figure debt.
The takeaway being: debt is a business phenomenon and discussions about it are a negotiation. I negotiated hard; when my offers of partial repayment were refused I never answered their calls again. In fact I created a special, looong outgoing voicemail message that sounded like I was answering the phone ("Hello? What? Hello? Are you there? Okay, a large pizza? We don't do gluten free!") and forwarded any unrecognized number to it straightaway. Just maybe that made someone laugh and they decided to toss my file.
Had I gotten a summons, I was advised by a lawyer to demand a witness. I never tested that tactic, but I do suspect that if someone had the means to extract money from me they would have, and they did not.
It's all about recoverability and risk over return. Most of the time a 5-figure debt will be worth the effort. When you start getting into $5k or less debts, it's sort of a crapshoot. The original owner of the debt will often sell it for pennies on the dollar, at which point a collector will do their best to get as much as they can out of people without a civil case, because civil cases are expensive and there's no real guarantee of return (people with no money, people on the verge of bankruptcy, etc).
The general advice is not to negotiate at all with creditors. Once something's gone into collections, you will see no benefit to resolving the debt other than mitigating your risk of a law suit. And even at that point, the first phase is a mediation option wherein you'd again be able to throw out a number, do a payment plan, etc.
On point #2, also false. Bad debt impacts your FICO score - often severely - but that impact is lessened with time. A 90-day or 120-day late (effectively a charge off) can ding a score 20 - 150 points easily depending on other credit factors. Shrugging your shoulders and saying "this won't be that bad" is not a good policy. While the record is not "permanent" (7 years for standard debt, 10 years for bankruptcies), they can have a significant impact.