Yes, it is very common for creditors to sale debt to factoring companies for pennies on the dollar. Usually, these companies will settle out the debt. If they have a judgment against you, then they have the right to garnish your wages or levy your accounts.
It sounds like they obtained a default judgment
against you. The complaint that they served on the original complaint that resulted in judgment should have information about who the original creditor was.
At this point, the judgment is accruing default interest. The judgment remains active for collection for at least five years from when it was entered, but can likely be renewed. The length of time that a judgment can be enforced varies from state to state, but most states allow the judgment to be renewed after the initial time period expires.
My suggestion is to look into settle out the debt. The amount of the debt is relatively low and if they bought the debt for a very low amount, then you may be able to settle it out for a reasonable amount. Your question was posted to the bankruptcy law list, so you may benefit from knowing that if you are intending to file a bankruptcy, the judgment and debt can be wiped out through the bankruptcy.
If you were not served with the lawsuit, then you may be able to reopen the case, but proving that you did not receive service of process can be difficult, and for the amount of debt that you are talking about it would probably be cheaper and quicker to settle it out. You may be able to negotiate with them to change how they are reporting the debt on your credit report.
I believe that I have answered your question. If you need further clarification, then please let me know.