Student Loan Collection Bill Introduced in Colorado Legislature

Legislators in Colorado are moving forward with a bill aimed at overhauling student loan collection in the state, which, if enacted would create several conflicts with the Colorado Fair Debt Collection Practices Act for debt collectors.

A copy of the bill, the Colorado Student Loan Equity Act, SB21-057, can be accessed by clicking here. It was introduced yesterday by state Sen. Faith Winter and Sen. Julie Gonzales, both Democrats. Both Senators were the legislators behind another bill that became law in Colorado this month, which extended the state’s moratorium on “extraordinary” collection actions until June.

The student loan servicing bill would remove an exemption for collectors that are already licensed to collect in Colorado, creating a duplicate, and in some cases, redundant, set of provisions to be followed. The bill has been referred to the Education Committee of the Colorado Senate for consideration.

Among other provisions, the bill:

  • Prohibits the “robo-signing” of documents in collection lawsuits and requires specific documents be included in any collection lawsuit to document the origination and chain of ownership of the loan.
  • Creates a private right of action for individuals “who are harmed by predatory acts” of creditors and collectors.
  • Requires collectors to provide specific information, such as the name of the true original lender and every subsequent loan holder, a schedule of all transactions, and a copy of the original contract in the initial communication with an individual.
  • Provide specific information, such as a log of all communication attempts for the preceding 12 months, upon request of the borrower.
  • Establishes a six-year statute of limitations to initiate a collection lawsuit from the date of the borrower’s last payment.

Should an individual sue a creditor or collector for violating the terms of the bill, it could be subject to punitive damages, attorney fees, and “any other relief the court deems proper.”

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