This reminds me of an essay question on a bar exam. Here is my abbreviated answer:
1) Choice of Laws
The creditor is reserving the right to litigate any breech of contract in Arizona. It is not obligating itself to do so, at least from what I am reading. The creditor is suing your spouse in Colorado, so therefore it is waiving its right to file suit in Arizona for the time being. A Colorado court will apply Colorado law in this case. Hypothetically, if a Colorado court did follow the three-year statute of limitations it would need to file the case before the deadline and not complete the trial, etc.
No, a bank statement is not enough evidence to show the debt is yours. (Based on Lefevre-Wollman opinion letter: FTC Debt validation: Staff opinion on Section 809(b) of the Fair Debt Collection Practices Act). You should validate the entire amount the collection agent claims you owe.
3) Statute of Limitations
Your attorney should argue that Vermont law should apply because the debt was incurred in Vermont as well as the default. So therefore, in the interest of consistency and justice, Vermont’s SOL should apply in your situation. However, I am not optimistic that a Colorado judge will accept this argument, but it is worth a try.
4) Attorney Fee Agreement
I do not understand your attorney fee discussion and question. Did your spouse execute an agreement with the collection agent? If so, that agreement is now in effect. If there is no agreement between your spouse and the collection agent then I do not see the phrase you quoted as particularly more or less significant than anything else.
5) Debt Resolution
You need a strategy for resolving the debt. See What Are My Debt Consolidation Options? to weigh your choices. Given that you are facing litigation, I recommend you consult with an attorney in your state who has experience in consumer law litigation. Collections law in and of itself is not complex, but you have an possible statute of limitations defense and an evidence issue that I think requires a professional’s attention.
I hope this information helps you Find. Learn & Save.