[CORRECTED] Colorado Enacts Law Prohibiting Garnishments

[EDITOR’S NOTE: This article was updated to reflect what was included in the final version of the bill that was signed into law. The original article mistakenly included information from an earlier version of the bill.]

The governor of Colorado has signed a bill into law that will establish a moratorium through Nov. 1 on what the law defines as “extraordinary” collection activities while also expanding the amount of property and assets that can be garnished or seized to repay unpaid debts.

A copy of the law, SB 20-211, can be accessed by clicking here. The intention of the law is to protect consumers who might be affected financially by the coronavirus pandemic.

An extraordinary collection action is defined as an action in the nature of
a garnishment, attachment, levy, or execution to collect or enforce a
judgment on a debt as defined under the state’s Fair Debt Collection Practices Act. Should someone take such an action, it would constitute an unfair and unconscionable means of collecting a debt under Colorado’s FDPCA. The law also authorizes the state to extend the moratorium through February 1, 2021 if necessary to “preserve the resources of state and local agencies or to protect the residents of Colorado from economic hardship as a result of the disaster emergency caused by COVID-19.”

Under the law, up to $4,000 in a depository account or accounts in the debtor’s name is exempt from levy and sale under a writ of attachment or execution.

Prior to a judgment creditor performing an extraordinary collection action, it must provide a written notice to the individual, to be sent at least 10 days prior to the execution of a writ, notifying the individual that he or she can temporarily suspend the extraordinary collection action if the individual is facing a financial hardship due to COVID-19. The individual is required to notify the creditor about the hardship, but is not required to provide any additional information.

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