Colorado Legislature Adopts Restrictions on Debt Collection Practices in Response to COVID-19
By: Haley Carmer, Associate, Garfield & Hecht, P.C.
In response to COVID-19, many state and local governments and the judiciary have taken various actions to limit the financial impact of the pandemic on consumers and businesses, including moratoriums on evictions and foreclosures, suspension of payment of sales tax revenues, and collection of utility bills. Through Senate Bill 20-211, the Colorado General Assembly has also imposed temporary restrictions on certain types of debt collection practices. Specifically, for the period beginning June 29, 2020, and ending November 1, 2020, a judgment creditor may not initiate or maintain a new “extraordinary collection action” unless the creditor complies with the requirements created by the bill. The assistant attorney general appointed to administer the Uniform Consumer Credit Code may extend the extraordinary collection action prohibition through February 1, 2021, if necessary to protect against economic hardships related to COVID‑19. The details of the extraordinary collection action prohibition are codified in C.R.S. § 24-33.5-704.3.
“Extraordinary collection action” is defined as “any action or proceeding in the nature of an attachment, garnishment, levy, or execution to collect or enforce a judgment on a debt.” “Debt” has the same meaning set forth in C.R.S. § 5-16-103(8), i.e., any obligation or alleged obligation of a natural person (but not of a business) to pay money arising out of a transaction, whether or not the obligation has been reduced to judgment. If a judgement creditor wishes to pursue an “extraordinary collection action” during the prohibition period, the creditor must, prior to the execution or service of a writ or legal process, provide written notice to the judgment debtor that the judgment debtor has the right to temporarily suspend the collection effort until the end of the prohibition period. The language of the required notice to the judgment debtor is set forth in the C.R.S. § 24-33.5-704.3(5)(a)(I).
To exercise the suspension right, the judgment debtor need only respond by phone or in writing to the judgment creditor indicating that the judgment debtor is experiencing financial hardship due to COVID-19. The judgment debtor is not required to provide documentation to support the suspension request, meaning the debtor does not have to demonstrate financial hardship to the judgment creditor. If the judgment debtor exercises the right to the suspension, such a request does not a waiver of the obligation to repay the debt and interest may continue to accrue during the suspension period.
In addition to imposing the extraordinary collection action prohibition, SB 20-211 adds a new category of property that is exempt from levy and sale under writs of attachment, garnishment, and execution. Now, through February 1, 2021, up to $4,000.00, cumulative, in a depository account or accounts in the name of the debtor is exempt from collection. See C.R.S. § 13-54-102(w)(I). Attempting to collect amounts in excess of those permitted under C.R.S. § 13-54-102 or § 13-54-104 is also deemed an unfair practice under the Colorado Fair Debt Collection Practices Act, C.R.S. §§ 5-16-101, et seq.
If you have questions about or need assistance collecting a debt, please contact Garfield & Hecht, P.C. attorneys Chris Bryan (), Haley Carmer () or Jason Buckley () by e-mail or by calling (970) 925-1936.