Bill just keeps going up

What is the name of this collection agency? Are you aware that TN requires a collection agency to be licensed by the state? You can check their collection license at the following link:
http://tn.gov/commerce/boards/collect/index.shtml
There are some exceptions for collection agencies, see below:
STATE: TENNESSEE

[QUOTE]INTEREST RATE

* Legal: 10%
* Judgment: 10% (or contract rate) (varies with type of transaction)

STATUTE OF LIMITATIONS (IN YEARS)

* Open Acct.: 6
* Written Contract: 6
* Domestic Judgment: 10
* Foreign Judgment: 10

BAD CHECK LAWS (CIVIL PENALTY)
Treble damages up to $500 + 10% interest & reasonable service charges, atty.'s fees, & court costs.

GENERAL GARNISHMENT EXEMPTIONS
See federal law. Add $2.50 per wk. for dependent child under 16.

COLLECTION AGENCY BOND & LICENSE

* Bond:
o $15,000 1-4 employee
o $20,000 5-9 employee
o $25,000 10 or more
* License: Yes
* Fee:
o $600 - Original
o $350 - Renewal
o $25 - Each Solicitor
* Exemption for out-of-state collectors: Contact state licensing authority. Out-of-state agencies may be exempt if they [1] maintain office in another state; [2] resides in a state that provides reciprocity; and [3] comply with provisions of licensing.
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If you find they aren't properly licensed I would file a complaint with the TN Collection Service Board.

Under Section 808 Unfair Practices of the Fair Debt Collection Practices Act under the Consumer Credit Protection Act, federal law prohibits a debt collector from collecting any amount (including any interest, fees, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

If a debt collection agency owns your account, and you did not expressly enter an agreement to pay interest and fees to that collection agency, than they cannot charge you anymore than what the already existing balance is.

Do you have a written agreement with this collection agency? Was there a default judgment obtained against you?

Here is a link to file a complaint:
http://tennessee.gov/commerce/complaint.shtml

What do you mean by garnishment? A garnishment can only be obtained through a court of law. Now, on the other hand, perhaps what they are talking about is a wage assignment, and as you said your wife agreed to it? Well then, if that is the case, you can easily revoke it at any time, just send a letter to them like the example below, make sure you date it and send it certified, return receipt requested. If this collection agency is not licensed, they can not sue you, if they try, then you can protest it due to the fact that they do not have the proper licensing as required by your state.
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