Colorado Collection Laws

Colorado Pikes Peak | Colorado Collection Laws

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IN THIS ARTICLE:
  • The statute of limitations for most Colorado debts is 6 years.
  • There are few exemptions for account levy in Colorado.
  • Colorado judgments may have a 6- or 20-year life.

Learn Colorado's Rules For Garnishment, Liens, and Foreclosure

A lender, collection agent or law firm that owns a collection account is a creditor. The law gives creditors several means of collecting delinquent debt. But before a creditor can start, the creditor must go to court to receive a judgment. See the Bills.com article Served Summons and Complaint to learn more about this process.

The court may grant a judgment to the creditor. A judgment is a declaration by a court the creditor has the legal right to demand a wage garnishment, a levy on the debtor’s bank accounts, a lien on the debtor’s property, and in some states, ask a sheriff to seize the debtor’s personal property. The laws calls these remedies. A creditor granted a judgment is called a judgment-creditor. Which of these tools a judgment-creditor will use depends on the circumstances. We discuss each of these remedies below.

Colorado law is unique in how it treats the life of judgments. A county court judgment is valid 6 years and a district court judgment is valid for 20. Judgments may be renewed for 6 or 20 years, respectively (§ 13-52-102).

Garnishment

The most common remedy judgment-creditors use to enforce judgments is wage garnishment. The judgment-creditor will contact your employer and require it deduct a certain portion of your wages each pay period and send the money to the judgment-creditor.

Protect Yourself Against Wage Garnishment
In most states, creditors may garnish between 10% and 25% of your wages, with the percentage allowed determined by state law. Garnishment of Social Security benefits or pensions for consumer debt is not allowed under federal law, but may be allowed for child support. See the Bills.com Wage Garnishment article to learn more.

Colorado exempts 75% of your net wages. A judgment-creditor must give a Colorado consumer notice of a garnishment, after which the consumer has 10 days to file for an exemption. Colorado wage garnishment orders have a six-month life, which can be renewed. Colorado law allows wage garnishment against the self-employed (Colorado § 13-54-104).

Colorado Bank Account Levy

A levy means the creditor has the right to take non-exempt money in a debtor’s account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state’s laws to find if a bank account can be levied.

Colorado law offers few exemptions for property, including financial accounts (Colorado § 13-54-102). Other states will exempt a certain amount from from levy by judgment-creditors, but Colorado allows judgment-creditors to zero-out a consumer's checking or savings accounts unless the funds come from an exempt source (see the next section for a list of exemptions). A Colorado judgment-creditor must notify a consumer 10 days before a levy, during which time the consumer has the right to file an exemption.

Colorado Lien

A lien is an encumbrance — a claim — on a property. For example, if the debtor owns a home, a creditor with a judgment has the right to place a lien on the home, meaning that if the debtor sells or refinances the home, the debtor will be required to pay the judgment out of the proceeds of the sale or refinance. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent the debtor from selling or refinancing until the debtor can pay off the judgment.

In Colorado, a judgment lien can be attached to real estate or non-exempt personal property. Here are property exemption amounts for Colorado residents (Colorado § 13-54-102):

  • A homestead with a value of $60,000 or less is protected from creditors' claims, or $90,000 if the homestead is occupied as a home by an elderly or disabled owner, an elderly or disabled spouse of an owner, or an elderly or disabled dependent of an owner.
  • One or more automobiles with a value of up to $5,000. If the vehicle is "kept and used by any elderly or disabled debtor, or by any debtor with an elderly or disabled spouse or dependent" the exemption amount is $10,000.
  • Clothing with a value of up to $1,500.
  • Jewelry with a value of up to $2,000.
  • Books and family pictures with a value of up to $1,500.
  • Burial sites of any value.
  • Household goods with a value of up to $3,000.
  • Provision and fuel with a value of up to $600.
  • Agriculture livestock and implements.
  • Money from a pension or family or child support.
  • A professional's library with a value up to $3,000.
  • A life insurance policy with a cash surrender value of up to $100,000.
  • Proceeds from personal injury claims.
  • Federal or state tax refunds.
  • Health aids prescribed by a professional.
  • Domestic, family or child support payments.

A Colorado judgment that requires the payment of money becomes a lien upon the judgment-debtor's real property when the judgment-creditor files a transcript of the judgment in county where the real estate is located. A lien has a 6-year life, but may be renewed (Colorado § 13-52-102).

If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.

Colorado Statute of Limitations

Each state or commonwealth has its own statute of limitations on civil matters. Here are some of Colorado’s statutes of limitations for consumer-related issues:

Account/Type Years Statute
Colorado statutes of limitations. Source: Bills.com
Credit card 3 or 6 § 13-80-101 or § 13-80-103.5
Spoken contract 6 § 13-80-103.5 (See § 38-10-124)
Written contract 6 § 13-80-103.5
Judgment Lien 6 §13-52-102
Judgment* 6 or 20 § 13-52-102
* Can be renewed for an additional 6 or 20 years.

When the statute of limitations clock starts depends on the circumstances and the particular statute. Generally, it starts when the action accrues, which means the date of breach. For credit card debt, this means the date the payment was missed. A statute of limitations clock may be paused (called "tolled") under some circumstances.

Colorado Foreclosure

A lender may foreclose judicially or non-judicially in Colorado. The common method is non-judicial. Colorado does not have a mortgage anti-deficiency law. Lenders must bid fair market value on the property in the event that total debt owed exceeds the property value less reasonable expenses; if the borrower can show lenders bid less than fair market value, the borrower can avoid a deficiency judgment. See  Chapter 315, Property, which is found in Colorado Revised Statutes § 13-80-103.5 for details, and Colorado Title 38, Articles 37-39.

Colorado Collection Agency Law

Collection agents must be licensed in Colorado.

Two laws protect Colorado residents. The Colorado Fair Debt Collection Practices Act (CFDCPA) mirrors the FDCPA in almost all respects. The Colorado Uniform Consumer Credit Code prohibits original creditors, which includes original creditors and collection agents from engaging in "extortionate and unconscionable" debt collection practices. These include:

  • Extending credit with the understanding that a delay in repayment will result in violence or harm against the consumer, the consumer's reputation or property
  • Using or threatening to use force or violence against the consumer
  • Harassing the consumer by calling the consumer frequently or at unusual hours
  • Simulating legal process or appearing to be a governmental agency
  • Causing or threatening injury to the consumer's reputation by threatening to disclose creditworthiness
  • Communicating with the consumer's employer about the credit issue before a judgment has been reached

Violation of the CFDCPA or Colorado Uniform Consumer Credit Code are not criminal matters. You can take two actions if a collection agent or original creditor violates the CFDCPA or Colorado Uniform Consumer Credit Code:

  • File a complaint with the Colorado Attorney General’s office
  • File a lawsuit against the collection agent or original creditor on your own

Consult with a lawyer to discuss filing a civil lawsuit against the collection agent. Some lawyers take these cases on a contingency basis, which means no out-of-pocket costs to you. Learn more about the CFDCPA in Colorado Revised Statutes § 12-14-101 to 12-14-137, and the Colorado Uniform Consumer Credit Code in Colorado Revised Statutes § 5-5-108 to 5-5-109.

Recommendation

Consult with a Colorado lawyer who is experienced in civil litigation to get precise answers to your questions about liens, levies, garnishment, and foreclosure.

29 Comments
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  • D
    Dawn,
    Jul, 2020

    I received notice from my employer that my wages will start being garnished on next pay date. I never received any kind of notice about this through mail or in person beforehand. It just went through the court & got pushed through. I am in Colorado. Is this legal & can anything be done now? The first garnishment is set for the end of this week.

    • 35x35
      Daniel,
      Jul, 2020

      Dawn, I can't give legal advice, as only an attorney can properly do so. Here are a couple of thoughts, with the understanding that I am not giving you legal advice.

      I am sorry to read what you are dealing with. It is possible for a person to not have received any advance notice and have her wages garnished. The creditor or collection agent is required to make legitimate attempts to serve you notice, but doing so is no guarantee they will reach you. If the proper service process was not followed you would have grounds to contest the judgment, but that is not an easy thing to do. Seek a consultation with a lawyer to understand what was required and if there are grounds to take action to stop the garnishment.

  • K
    Kate,
    Jul, 2020

    A creditor on my report from Equifax stated that I lived at their complex. The debt collector stated the times that I lived there. The debt collector falsified all kinds of information. Can they obtain a judgment due to lies?

    • 35x35
      Daniel,
      Jul, 2020

      Kate, I am not a lawyer, so any information I share is not to be considered legal advice.

      My answer is "Yes, a debt collector can lie and win a judgment against a consumer." This is especially the case if a default judgment is entered because the debtor did not appear, even if non-appearance is due to not being properly served notice. I can't tell from your question whether a judgment exists or if you are asking what potentially could happen.

      If you believe you have proof of the debt collector lying, I recommend that you seek a consulatation with an attorney that handles violations of the FDCPA (Fair Debt Collection Practices Act). In this kind of case, the attorney tpically doesn't charge you a fee but will take the case if he or she feels you have a winning case and money can be obtained from the debt collector. Do a search online for "FDCPA attorney" and the name of the city in which you live. Please report back on how things go for you!

  • C
    Chris miller,
    Jun, 2020

    So I just had a garnishment come to my house and I went to my employer as well saying that it was for like $1200. I didn’t say who it was for. I called the lawyer they said it was for medical bill from 2012. I live in Colorado. Is that legal? I thought they only had six years to collect. I hadn’t gotten anything in the mail. I didn’t have to go to court because this was from 2012 eight years ago, almost 9 years ago.

    • 35x35
      Daniel,
      Jul, 2020

      Chris, I am not a lawyer, so any information I share is what I believe to be true but it is not to be taken as legal advice.

      Statute of limitations issues are tricky. There are actions a person can take that stop the clock from running. Someone would have to look at the entire set of facts to properly say if you have recourse.

      Unfortunately, a judgment was ordered and a garnishment is hitting you. I am sorry you are learning this the hard way, but ALWAYS go to court if sued. That is where you can present your argument, including the Statute of Limitations. If you don't appear, a default judgment can be issued, even if the facts would have supported you. It is your responsibility to make the affirmative defense on your behalf.

  • T
    Taylor,
    Jun, 2020

    How often can garnishments take place. Like the garnishment intreval? Weekly, biweekly, monthly??

    • 35x35
      Daniel,
      Jun, 2020

      My understanding is that they can happen as often as you are paid, coming out of each paycheck.

  • J
    jennifer,
    May, 2020

    My husband has many medical bills in collection right now. The collection agency in an effort to collect this debt has decided to send these bill to our house in my name. Is this legal? The bills do not mention my husband's name at all. I thought they were for me and called the hospital. They said no they are not yours. I called the collection agency and he said I am responsible for my husband's bill even though I know I did not sign anything.

    • 35x35
      Daniel,
      May, 2020

      Jennifer, the reason they are coming after you for the debt is due to the "doctrine of necessaries." You can read about it and the source in Colorado law at the link above. Essentially, a spouse can be held responsible for a debt that was medically necessary for the other spouse, even if no paperwork was signed.  Would you classify the medical treatmet your husband received necessary? If it meets that standard, you can be on the hook for it in Colorado.

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