I had my car repo'd in 2002, and my wages have been getting garnished since April of this year 2009. I only owed $2000 on the car, but they have taken $3900 so far from me through the garnishment. I set a court date, went in without an lawyer and was told they'd break the payments from 173.00 to 80.00 bi-weekly until an additional 3500 was paid! The 3900 they'd already collected was just on interests and late fees, none of that was towards the pay-off. Can they do this?

Yes. When your car was repo-ed, it was sold at auction. Apparently the amount received from the auction was less than the balance on the loan. From 2002 until the garnishment order was put in place, the balance has accrued interest and fees. Its not unusual for the amount owed to double or triple in that time frame.

So the answer to your question is yes, they can do that. That's what happens when can't pay your debts.

I was told that I had a few options..
A. pay the 80 bi-weekly until the 3500 is paid in full
B. settle for a pay-off amount of $2000.00

I know I owed for the car, but it is almost impossible to pay my other bills with this garnishment. I am also head of my household (I provide support for my niece's two children from time to time). I was told that I am not legally required to care for them, so my paperwork didn't even get looked at stating I am head of household, claiming them on my tax return. I agreed to the 80 bi-weekly, but I still feel like I was ran over. Am I stuck with this decision or should I re-file an objection to make another court date?

I would try and borrow the $2K. It may cost you less in the long run.

Thank you so much Scott... I appreciate your help with this matter.