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Credit Card Debt in Colorado

Mark Cappel
UpdatedApr 5, 2024

My husband was sued in Colorado for a credit card debt incurred in Vermont but agreed to in Arizona. What law applies?

My husband was served a Summons in CO. on 12/20/09 to answer within 20 days for an old debt. This debt has been sold (probably at least twice). We have our bank statement from our last payment made in Nov. '06 however we do not have any subsequent bank statements. The card agreement was attached to the Summons and stated under the Applicable Law section "this agreement and your account will be governed by federal law, and the laws of Arizona, whether or not you live in Arizona" and goes on with standard applicable law agreement. Under the Assignment of Account section it states "We may sell, assign or transfer your Account or any portion thereof without notice to you." Goes on to state you can't, then states "In addition, we may refer the account to a collection agency or attorney or attorney who shall be entitled to enforce this Agreement according to its terms, and any of our rights shall apply to those persons." Does this mean the CA and Attorneys are required to abide by AZ State Legislature 12-543? Oral debt; stated or open account; relief on ground of fraud or mistake; three year limitation There shall be commenced and prosecuted within three years after the cause of action accrues, and not afterward, the following actions: 1. For debt where the indebtedness is not evidenced by a contract in writing. 2. Upon stated or open accounts other than such mutual and current accounts as concern the trade of merchandise between merchant and merchant, their factors or agents, but no item of a stated or open account shall be barred so long as any item thereof has been incurred within three years immediately prior to the bringing of an action thereon. 3. For relief on the ground of fraud or mistake, which cause of action shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud or mistake. If they must abide by AZ law, does "commenced and prosecuted within three years" mean the suit must be completed before the 3 year mark? Also, is one bank statement enough to prove last payment (no purchases or cash advances were used for awhile before, during, or since last payment, and no attempts have been made to either contact credit card company or ca, or to resolve or respond to the delinquency). What other documentation should we try to obtain and should these items be attached to the answer letter? Assuming this is a time-barred debt under AZ (CO is SOL 6 years) (VA our former state of residence is SOL 3 years, home state during credit issuance, and subsequent delinquency), do we only address this issue, or should we also request a debt validation, and validation of all applied interest considering his credit limit was approx. $12,500 and principal amount claimed by Plaintiff $14,638.28, represents principal amount of account stated, interest $8,242.78 and attorney fees of 1,000 "as contractually agreed to between Plaintiff’s assignor and the Defendant" Note: Last statement in addition to the attached credit card, seems to be their key piece of evidence as to why he legally owes them money and why they believe they are legally entitled to file suit, if this is the case should I notate that their own evidence refutes their ability to pursue legal action according to AZ SOL? Also, I’d like to note that the majority of our expenditures have been food, shelter, clothing, utilities, and medical bills (our son has a medical condition), we have very few luxuries and had always attempted to repay our debts as best as we could. We used our entire savings and all our retirement in an attempt to satisfy our debt during a period of unemployment and missed one payment to this credit card company to which they responded by raising our interest rate from a very low APR to over 22% and since then it has been a domino effect. Any information you can provide would be greatly appreciated.

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.

2) Evidence

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.



Struggling with debt?

Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Housing debt totaled $12.612 trillion and non-housing debt was $4.891 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

The amount of debt and debt in collections vary by state. For example, in Wisconsin, 20% have any kind of debt in collections and the median debt in collections is $1642. Medical debt is common and 11% have that in collections. The median medical debt in collections is $943.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.