I don’t know why he was in federal court except that it is a federal debt and that is an option. The government has the right to bring any action in federal court and this might be an area where they were having no luck in state court or the state court judges were small towning the cases Collections for the student loan debts sold to collectors are not done by solo practitioners or small law firms bringing $2600 suits, they are done by huge collection mills, attorneys used to bringing 200 suits a day.
Some agencies just prefer always being in federal court. I worked for an agency and almost everything was moved to federal court if it was in process in a local court when we took over because that’s the court we ‘knew’ and we preferred it. We only originated cased in federal court. We were not in the small towns or counties, we were in 10 cities around the country and we needed one process, one system. Most of us weren’t even licensed in the states we worked in, so we could go to federal court but not state. We often got rid of the original attorney and moved it to federal court with an attorney we were familiar with and who knew how to use the federal system. The exception was real estate foreclosures, but even those could be moved and sometimes we did. Sometimes we regretted that we didn’t move the case because we got stuck with local judges who though of us as the big bad government and things stalled.
Yes, they would have the SSN number from the original loan. So what? That doesn’t give the bank account information automatically to the creditor. Sometimes those show up on a credit check, but usually don’t. They can garnish tax returns if there is one, but they might be in line behind other agencies like the IRS itself, state or local taxes, other defaulted government obligations. The garnishment only works once a year too, and the timing has to be right. Some garnishments are only honored if there is money in the account on the day it is presented and the garnishment isn’t a continuing lien on the account. Very hit or miss.
Who ever thought that student loan interest rates were set by the level of risk? They are very very high risk loans, with a high default rate. No underwriting at all, everyone in the same category (undergrad, grad, Perkins, Plus) gets the same rate.