If this is a federal loan, you are in default. Your original lender filed a claim with your guarantor...and the guarantor contracted with DCS. So the original lender is out of the picture.
Sounds like they are offering you a rehab for your loan...go open a free checking account and take advantage of it! Otherwise they WILL start the garnishment process and this does not require a court order.
Calling from out of state is irrelevant....they are licenced in all 50 states...they are also contractor for the US Dept of Education. The default should not be coming as a surprise for you.....letters and calls have been made/attempted to you over the last 9 months.