Yes, they can do it, and, yes, you can dispute it. Immediately contact the attorney requesting the garnishment and demand verification of the amount owed. Send them copies of all your proof that the amount was paid 5 years ago and demand they show you how you owe them money. If you don't like their answer or don't get one, file a motion with the court on the original judgment seeking an order rendering it satisfied and to quash the garnishment.
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