Unfortunately the answer is yes they can and more often than not WILL continue to report even during any wage garnishment period. Have you ever tried to enter into a rehabilitation agreement with the current servicer?
*EDIT* Sorry for the computer double post glitch
If garnishment payments are going to the debt collector, then they are the prevailing plaintiff and the owner of the debt.
Yes, they still have active collection authority.
It remains a delinquent debt under collection until it is fully discharged.
The collection will be removed no later than 7 years plus 180 days from the DOFD on the OC account.
That applies regardless of whether the debt has been paid.
Earlier removal can only be obtained by voluntary deletion by the debt collector, which is unlikely until you have paid the entire debt.
A collection never becomes a "postive tradeline", even if paid. It is not an account of the consumer, and is always a negative factor.