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Colorado has strict debt collection laws that combine federal and state regulations to protect consumers. The Colorado Fair Debt Collection Practices Act (CFDCPA) works alongside the federal FDCPA, requiring debt collectors to follow specific rules when pursuing debts. Key highlights include:
Violations can result in fines, lawsuits, and damages up to $1,000 per case. Colorado's evolving laws emphasize transparency, fairness, and consumer rights in debt collection practices.
Colorado Debt Collection Prohibited Practices: Harassment, False Statements, and Unfair Practices
The Colorado Fair Debt Collection Practices Act (Colo. Rev. Stat. § 5-16-101 et seq.) is the main law in Colorado that regulates debt collectors and collection agencies. It aligns with many protections offered by the federal FDCPA but includes additional requirements, such as state licensing and bonding obligations. This law applies to anyone involved in collecting debts or purchasing delinquent debt.
Both federal and Colorado laws prohibit harassment, deceptive practices, and unfair collection methods. Colorado takes it a step further by requiring collectors to hold a state license and bond. Additionally, initial written communications must include specific language, like a link to the Colorado Attorney General's website, so consumers can learn about their rights under the CFDCPA.
"Any person acting as a collection agency must possess a valid license issued by the administrator in accordance with this article 16 and any rules adopted pursuant thereto."
- Colorado Revised Statutes § 5-16-118
The state also enforces stricter rules on medical debt. For instance, medical debts cannot be reported to credit bureaus unless they exceed the national conforming loan limit for a one-unit property, and this restriction remains in effect until July 1, 2028. Debt buyers filing legal complaints must include evidence like the original contract and an unbroken chain of assignment to prove ownership of the debt. These rules set clear boundaries for behavior and communication, as detailed below.
The CFDCPA lays out three main categories of prohibited behavior: harassment, false statements, and unfair practices. For example, collectors cannot threaten violence, use obscene language, make anonymous calls, or repeatedly call to annoy. If a consumer disputes a debt in writing within 30 days of the initial contact, the collector must stop all collection efforts until they provide written verification of the debt.
"A debt collector or collection agency shall not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt."
- Colorado Revised Statutes § 5-16-106
False statements include pretending to be an attorney, suggesting government affiliation, or misrepresenting the amount or legal status of a debt. Unfair practices cover actions like charging unauthorized fees, depositing postdated checks early, or threatening to seize property without legal authority. Using postcards to communicate is also banned, as it breaches consumer privacy.
| Category | Prohibited Actions |
|---|---|
| Harassment | Threatening violence, obscene language, anonymous calls, or repeated calls meant to annoy |
| False Statements | Claiming to be an attorney, implying government ties, or misrepresenting the debt's amount or status |
| Unfair Practices | Charging unauthorized fees, early deposit of postdated checks, or illegal property seizure threats |
| Communication | Contacting consumers at work (when prohibited) or those represented by an attorney |
Violations of the CFDCPA can lead to statutory damages of up to $1,000 per case, in addition to any actual damages. Consumers must choose between federal and state laws for the best remedy, as they cannot recover damages under both for the same violation. These rules ensure strict compliance with Colorado's debt collection standards.
In addition to regulating behavior, the CFDCPA enforces strict licensing and bonding rules. Every collection agency operating in Colorado, whether in-state or out-of-state, must hold a valid state license. The application process involves a $500 nonrefundable investigation fee, a $1,500 initial license fee, and a $1,500 annual renewal fee due by July 1.
Applicants must employ or be owned by at least one person with at least two years of experience in a responsible role at a collection agency. Each agency must designate a collections manager who oversees the conduct of all debt collectors within the agency. To safeguard creditor clients from financial losses, licensees must also maintain a surety bond.
| Fee Type | Amount |
|---|---|
| Investigation Fee (Nonrefundable) | $500 |
| Initial License Application Fee | $1,500 |
| Annual Renewal License Fee | $1,500 |
Agencies must notify the administering authority within 30 days of changes to their business name, address, surety bond, or collections manager. A new license application is required if there is a 50% or greater change in ownership or if the business structure changes (e.g., from a partnership to a corporation). While only the main office needs a license, branch locations must be reported within 30 days of opening.
Certain entities are exempt from the CFDCPA, including creditors collecting their own debts under their own name, government employees acting in their official capacity, and agencies that collect only commercial, business, or agricultural debts. While attorneys don't need a collection agency license, they must still follow the law's consumer protection rules.
Colorado law builds on the rules of the CFDCPA to establish strict guidelines for debt collection practices. One of the key areas of focus is communication. Collectors are not allowed to contact consumers before 8 a.m. or after 9 p.m. local time. They’re also barred from calling consumers at work if they are aware that the employer prohibits such calls. Additionally, collectors cannot discuss the debt with anyone other than the consumer, their attorney, or a credit reporting agency. Even the use of postcards for communication is off-limits.
When it comes to fees, collectors are prohibited from charging anything beyond what was agreed upon in the original contract or allowed by law. For medical debts, collection efforts must pause during health insurance appeals, and any legal action regarding the debt must include a redacted itemized list of charges.
Debt collectors in Colorado can contact consumers through phone or mail to request payments, as long as they stay within legal boundaries. They can also file lawsuits to recover debts, but these must be filed in the judicial district where the consumer resides or where the contract was signed. Reporting unpaid debts to credit bureaus is another option, but collectors must wait 30 days after sending the initial notice before doing so.
Collectors are required to identify themselves within the first 60 seconds of a phone conversation once the consumer is on the line. Misleading tactics, such as impersonating attorneys or government officials, are strictly prohibited. These rules are paired with consumer protections that allow for debt validation and dispute resolution.
Consumers in Colorado have clear rights to challenge inaccurate debts. Within five days of the first contact, debt collectors must send a written validation notice that includes the debt amount, the creditor's name, and instructions for disputing the debt. Consumers then have 30 days from receiving this notice to submit a written dispute.
"The debt must be verified before the debt collector or collection agency can collect upon the disputed debt."
- Amy Loftsgordon, Attorney, Nolo
Once a written dispute is received, collectors must immediately pause collection efforts until they provide verification, such as a copy of a judgment or the original creditor's contact details. For medical debts, consumers can request an itemized statement that includes service dates, descriptions of healthcare services, and any applicable insurance discounts or financial assistance. During this process, collection efforts must be paused, and no fees can be charged for providing this information. Importantly, failing to dispute a debt does not count as an admission of liability in court.
Consumers also have the right to stop all communications from a collector by sending a written "cease communication" request. After receiving this, the collector may only reach out to confirm they will stop contacting the consumer or to notify them of specific legal actions, such as filing a lawsuit.
Colorado sets a six-year statute of limitations on most consumer debts, including credit card and medical debts. This period starts from the date of the last payment or acknowledgment of the debt. While the debt itself doesn’t disappear after six years, collectors lose the legal right to file a lawsuit for recovery.
This time limit is a critical defense for consumers dealing with older debts. If a collector threatens legal action on a debt beyond the statute of limitations, consumers can use this as a defense in court. However, making even a small payment or acknowledging the debt in writing can restart the six-year period, so it’s essential to proceed carefully when dealing with old debts.
| Action Type | Legal Restriction/Rule |
|---|---|
| Calling Hours | No contact allowed before 8 a.m. or after 9 p.m. |
| Workplace Contact | Prohibited if employer disallows such calls |
| Credit Reporting | Cannot report debt for the first 30 days after notice |
| Validation Period | Collection must stop until debt is verified after dispute |
| Statute of Limitations | Six years for most consumer debts like credit cards and medical debt |
Colorado offers additional protections for medical debt. For instance, medical debts cannot be reported to credit bureaus or impact credit scores unless the debt is tied to a credit transaction exceeding the national conforming loan limit for a one-unit property. This rule is in effect until July 1, 2028.
Debt buyers in Colorado are considered debt collectors when they acquire defaulted debt.
Colorado Revised Statutes § 5-16-103(8.5) defines a debt buyer as:
"Debt buyer means a person who engages in the business of purchasing delinquent or defaulted debt for collection purposes, whether it collects the debt itself, hires a third party for collection, or hires an attorney for litigation in order to collect the debt. Debt buyers are collection agencies for the purposes of this article 16."
- Colorado Revised Statutes § 5-16-103(8.5)
This classification means debt buyers must meet all Colorado Fair Debt Collection Practices Act (CFDCPA) requirements. These include obtaining a license, filing a surety bond, and following strict communication and collection rules. These obligations apply to consumer debts sold or resold on or after January 1, 2018, if the debt was already in default when acquired.
Debt buyers who own debts outright must maintain a license and follow collection rules. However, they are not required to meet certain financial requirements, such as maintaining liquid asset minimums, trust accounts, or monthly creditor accountings. They must, however, operate a staffed office in Colorado during business hours to accept payments and maintain records.
Use the following checklist to ensure compliance with CFDCPA when trading debt portfolios.
Before engaging in debt portfolio trading, confirm the following key requirements:
| Requirement | Specification |
|---|---|
| Licensing | Required for the main office; branch offices must register within 30 days. |
| Experience | At least one principal or manager must have two years of collection experience. |
| Bonding | Filing a surety bond is mandatory. |
| Credit Reporting | Debt cannot be reported for 30 days after the initial consumer notice. |
| Default Status | Applies if the debt was in default when purchased. |
| Effective Date | Covers debts sold or resold on or after January 1, 2018. |
For medical debt portfolios, additional rules apply. Initial consumer communications must include disclosures stating that medical debt cannot be reported to credit bureaus or impact credit scores unless tied to specific high-value loans. Additionally, debt buyers cannot report purchased debt to credit bureaus until 30 days after sending the first validation notice to the consumer. Violating this rule could result in liability for damages up to $1,000.
When assessing portfolios for purchase, buyers must verify the default status of each debt at the time of acquisition. Proper documentation is essential to determine whether CFDCPA requirements apply. Platforms like Debexpert offer secure, encrypted file sharing, enabling buyers to review portfolio details and compliance documents safely before finalizing a transaction.
Adhering to these compliance measures is essential for navigating Colorado's regulatory framework effectively.
Colorado has introduced new laws that bring notable changes to debt collection practices. These updates impose additional compliance requirements for debt buyers and collectors, especially in handling general and medical debt.
House Bill 25-1194 mandates that debt collectors must halt collection efforts if a consumer provides written notice and documentation proving that a debt arose from economic abuse or coercion. Economic abuse, which is present in 98% of such relationships, includes actions like restricting access to funds, stealing financial resources, or forcing defaults on joint debts.
To resume collection, collectors must secure a court order, decree, or judgment affirming that the debt was not the result of economic abuse. The responsibility to prove the debt's legitimacy lies entirely with the collector, requiring a preponderance of evidence.
Collectors are also required to limit communication to the contact details provided in the consumer's "statement of coerced debt." They are strictly prohibited from sharing this information with the alleged perpetrator or joint account holders unless authorized by a court order. Acceptable documentation supporting coerced debt claims includes police reports, court orders, or sworn statements from qualified third parties such as licensed medical professionals, victim advocates, or clergy members.
In addition to addressing coercion, Colorado has also introduced significant changes to the treatment of medical debt.
House Bill 23-1126, passed in 2023, prevents consumer reporting agencies from including medical debt on credit reports. This law directly impacts the 700,000 Coloradans who had medical debt in collections as of 2023, making Colorado the first state in the U.S. to enforce such a restriction.
The legislation also limits the sale of medical debt portfolios. Debt collectors are prohibited from selling medical debt if they know - or reasonably should know - that a health insurance decision is under review or appeal, or if such a review was pending within the past 63 days. Additionally, Senate Bill 23-93 caps interest on medical debt at 3% per year, which reduces the long-term profitability of these debt portfolios.
However, Colorado's medical debt reporting ban is currently facing legal challenges at the federal level. A Trump administration rule from October 2025 asserts that the Fair Credit Reporting Act (FCRA) overrides state laws on debt reporting. Industry groups, including ACA International, are using this federal guidance to contest Colorado's protections in court.
"Creditors and lenders who lack a complete picture of a consumer's credit history may extend a loan the consumer cannot afford, which only hurts their financial situation and increases the cost of credit for everyone" - Jennifer Whipple, Board President of ACA International
The outcome of the ACA International v. Colorado lawsuit will determine whether medical debt must once again be reported, despite state-level restrictions. This legal uncertainty requires debt buyers and credit reporting agencies to stay vigilant and adapt their practices as the situation evolves.
Colorado takes debt collection laws seriously, offering both civil remedies and regulatory oversight to ensure consumers have ways to address violations and hold collectors accountable.
Consumers have the option to file lawsuits if a debt collector violates the CFDCPA or FDCPA. If successful, they can recover actual damages, statutory damages (up to $1,000), and attorney fees. When determining damages, courts consider factors like how frequent and persistent the violations were, as well as the intent behind them. However, debt collectors can defend themselves by proving the violation was a bona fide error - an unintentional mistake that occurred despite having proper measures in place to prevent such errors. Importantly, consumers can’t claim double damages, and if their lawsuit fails, they might be required to pay the collector’s attorney fees and court costs.
In addition to lawsuits, regulatory authorities play a key role in enforcing debt collection laws. The Colorado Attorney General's Office, through the Administrator of the CFDCPA, oversees compliance. According to the Office:
"The Colorado Attorney General's Office, through the Administrator of the CFDCPA, investigates complaints about collection agencies and takes appropriate disciplinary or legal action when a collection agency has violated the law."
Consumers can file complaints with the Colorado Department of Law's Consumer Protection Section or directly with the Attorney General's Office. Violations can also be reported to the Consumer Financial Protection Bureau (CFPB), which typically responds within 15 days. The Administrator has the authority to take significant action, including denying, revoking, or suspending collection agency licenses. They can also impose administrative fines of up to $1,500 per violation.
Colorado's debt collection laws create a structured system designed to safeguard consumers while outlining clear rules for collectors and debt buyers. Since January 1, 2018, debt buyers have been classified as collection agencies under the Colorado Fair Debt Collection Practices Act (CFDCPA), requiring them to obtain proper licensing, maintain accurate documentation, and respect consumer rights.
This regulatory framework enforces strict compliance, with non-compliance carrying serious consequences. Violations can result in liability for actual damages, statutory penalties of up to $1,000 per infraction, and enforcement actions by regulators.
To remain compliant, ensure your agency license is active and renewed by July 1 each year. Keep thorough documentation, including a complete chain of assignments from the original creditor. Follow communication guidelines carefully: reach out to consumers only between 8:00 a.m. and 9:00 p.m., identify yourself immediately, and provide written validation of the debt within five days. If a consumer disputes the debt in writing or requests a cessation of communication, halt all collection efforts until proper verification is provided.
Looking ahead, Colorado's debt collection laws are set to change over time. For instance, protections for medical debt are scheduled to expire on July 1, 2028, unless extended by lawmakers. This underscores the importance of staying updated on legislative developments. By keeping up with regulatory changes and strictly adhering to licensing, documentation, and communication practices, you can avoid costly penalties and maintain compliance in Colorado's evolving debt collection landscape.
To confirm whether a collector is licensed in Colorado, ensure they have a valid license issued by the Colorado Department of Law's administrator. You can verify this by accessing licensing records through official state resources.
To challenge a debt and pause collection efforts, you need to send a written dispute letter to the debt collector within 30 days of receiving their notice. Make sure your letter includes your account information, a clear statement that you dispute the debt, and a request for validation - such as proof of the amount owed and the name of the creditor. Be sure to keep copies of everything you send. According to the Fair Debt Collection Practices Act (FDCPA), collectors must stop pursuing the debt until they provide the requested validation.
To file a lawsuit in Colorado, a debt buyer must have a valid collection agency license. Obtaining this license involves fulfilling certain requirements, such as having relevant work experience, submitting a bond, and complying with Colorado's legal regulations. Furthermore, they are required to present evidence of the original debt. This can include documents like the original contract, the account agreement, or a recent account statement.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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