Colorado Extends Window Limiting ‘Extraordinary Collection Actions’

The state of Colorado has extended its limitations on “extraordinary collection actions” until Feb. 1, 2021, determining that while economic conditions in the state are improving, they remain similar to the conditions when the law was first put into place, while also needing to preserve and prioritize the resources of state and local resources.

A copy of the order extending the limitations can be accessed by clicking here.

The limitations were put in place upon the passage of Senate Bill 20-211, which was enacted to protect consumers in Colorado who have been affected 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. 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.

In making the decision to extend the order, the administrator of the state’s Uniform Consumer Credit Code looked at unemployment data in the state, as well as small business employment figures and other economic indicators. As well, the administrator weighed comments from both the industry and consumer side of the transaction regarding whether the extension was needed.

“The Administrator recognizes that some Colorado residents may experience economic harm from the extension of SB-211’s protections because debt collectors and firms will suspend extraordinary collections for judgment debtors who respond to the SB-211 notice because they are experiencing hardship due to COVID-19,” it wrote in its order extending the deadline. “Collection agencies and firms employ Colorado residents who may lose their jobs. Creditors, including Colorado small businesses, who rely on collections may also have to cut hours or lay off Colorado residents.”

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