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In Colorado, the statute of limitations for most consumer debts, such as credit cards, medical bills, and auto loans, is 6 years. This means creditors have six years from the date of the last payment or default to file a lawsuit to recover the debt. However, some debts, like oral agreements or those missing essential documentation, have a shorter 3-year limit. Even after this period, the debt remains, but creditors can no longer sue to collect it.
Key points:
Understanding these timeframes is crucial for both consumers and debt professionals to navigate debt collection laws effectively.
Colorado Debt Collection Statute of Limitations Timeline Guide
In Colorado, creditors have a six-year window to file lawsuits for most consumer debts, as outlined in Colorado Revised Statute § 13-80-103.5. This statute covers debts that are either liquidated (amounts easily determined) or determinable. The law specifies:
"The following actions shall be commenced within six years after the cause of action accrues and not thereafter: All actions to recover a liquidated debt or an unliquidated, determinable amount of money due to the person bringing the action..."
This six-year rule applies to various types of obligations, including credit card debt, medical bills, personal loans, promissory notes, overdue rent, and auto loans. A debt is considered "liquidated" when the amount owed can be calculated through a straightforward agreement or formula. For example, the Colorado Supreme Court has ruled that hospital bills fall under this category because their amounts are clearly defined.
It’s important to note that while the statute of limitations prevents creditors from suing to recover a debt after six years, it doesn’t eliminate the debt itself. As highlighted in Estate of Ramsey v. State, Dept. of Rev.:
"While the statute of limitations may cause the remedy on a debt to be lost, it does not extinguish the debt."
Next, let’s explore what triggers the start of this six-year limitation period.
The timing of when the six-year period begins is crucial for creditors and debt portfolio managers assessing the viability of a claim. The countdown starts the day after the debt becomes due or when the cause of action accrues. For promissory notes with a specific maturity date, the clock begins the day after that date.
For installment loans, such as car payments, each missed installment creates its own cause of action, starting its own six-year clock. However, if a creditor accelerates the loan - demanding the full balance immediately - the six-year period for the entire debt starts on the acceleration date. Colorado law clarifies:
"If a money obligation is payable in installments, a separate cause of action arises on each installment and the statute of limitations begins to run against each installment when it becomes due."
Additionally, for debts that accrue interest, the six-year period can begin from the date of the last interest payment. A partial payment on a debt also resets the clock, restarting the six-year countdown from the payment date. This timing plays a pivotal role in determining the market value of debt portfolios within Colorado.
While most debts follow a six-year limitation period, there are exceptions and unique cases that can significantly impact collection strategies.
Some debts are subject to a shorter, three-year limitation period. For example, oral contracts - agreements made without formal documentation - fall under this category. Similarly, debts where collectors lack essential documentation, like the exact amount owed or a clear link to a contract, also have this three-year limit. Non-liquidated debts, such as quantum meruit claims for reasonable compensation, are another example of debts limited to three years.
Now, let’s look at how judgment debts follow different timelines.
When a creditor secures a court judgment, the timeline for enforcement depends on the court that issued it. County court judgments are enforceable for six years, while district court judgments can be enforced for up to 20 years. As explained by the Colorado Judicial Branch:
"If you were awarded a money judgment in county court, it will expire 6 years from the date of the judgment. If you were awarded a money judgment in district court, it will expire 20 years from the date of the judgment."
Judgments can be renewed if the creditor takes action before expiration. For county court judgments, this renewal adds another six years, while district court judgments can be extended for an additional 20 years. As Douglas D. Koktavy, P.C. highlights:
"Colorado law allows judgments to be extended beyond this initial timeframe. If a creditor takes the necessary steps before the expiration date, the judgment can remain valid indefinitely."
This renewal process makes judgment debts valuable, especially in long-term collection and debt trading strategies. However, if a judgment expires without being renewed, the creditor permanently loses the right to collect. For debt portfolio managers, district court judgments are particularly attractive because of their 20-year enforcement window and the availability of tools like wage garnishments, bank levies, and property liens.
Knowing what actions can restart the statute of limitations is essential for anyone dealing with debt collection or managing portfolios. Certain actions by the debtor can reset the clock, giving creditors a new opportunity to pursue legal enforcement. This can directly influence the collectability and value of an account.
Several actions by a debtor can reset the statute of limitations:
Additionally, the statute of limitations can be temporarily paused, or "tolled", in certain situations. For example, if a debtor moves out of Colorado, the clock stops until they return or can be served within the state. Filing a lawsuit also pauses the statute of limitations while the case is active. For debt professionals, these triggers are critical to understanding which accounts are enforceable and which are time-barred.
For debt buyers, understanding how these actions affect the statute of limitations is key to accurately assessing the value of a portfolio. Accounts where the statute of limitations has been reset or remains active are generally more valuable because they can be pursued through legal channels. In contrast, time-barred debts are limited to voluntary repayment efforts and are worth significantly less.
To avoid costly mistakes, debt buyers should:
Attempting to sue or threaten legal action on time-barred debts can lead to serious consequences, including counterclaims, fines, and reputational harm. For this reason, focusing collection efforts on accounts within the enforceable timeframe is not just practical - it’s necessary. Time-barred debts cannot be recovered through court judgments, making them far less valuable.
In Colorado, debt professionals must navigate strict legal frameworks to maintain compliance and protect the value of debt portfolios. The state's Fair Debt Collection Practices Act (CFDCPA) outlines detailed rules for debt collectors and buyers, with violations leading to fines, lawsuits, or even license revocation. For anyone managing or acquiring debt in Colorado, understanding these rules is non-negotiable.
The CFDCPA governs all collection agencies, solicitors, and debt collectors operating in Colorado or collecting from its residents. Debt buyers are also classified as collection agencies under the law and must follow all CFDCPA provisions.
To operate legally, collection agencies must obtain a license from the Colorado Administrator of the Uniform Consumer Credit Code. The initial license application fee is $1,500, with an additional $500 nonrefundable investigation fee. Licenses must be renewed annually by July 1 for $1,500. While attorneys are exempt from licensing, they are still bound by the CFDCPA's substantive rules. Compliance ensures that debt portfolios remain enforceable and retain their market value.
| Fee Type | Amount |
|---|---|
| Investigation Fee (Nonrefundable) | $500 |
| Initial License Application Fee | $1,500 |
| Annual Renewal License Fee | $1,500 |
Collectors must adhere to specific communication rules. They may only contact consumers between 8:00 a.m. and 9:00 p.m. local time and cannot reach out to consumers at work if the employer prohibits such calls. If a consumer requests in writing to cease communication or states a refusal to pay, the collector must stop all further contact except to inform the consumer of legal remedies being pursued.
Within five days of the first contact, collectors are required to send a written notice detailing the debt amount, the creditor's name, and the consumer's right to dispute the debt within 30 days. Additionally, credit reporting must be delayed by at least 30 days after mailing this notice.
The CFDCPA also prohibits certain practices, such as implying government affiliation, misrepresenting debt amounts, or threatening legal action without intent to follow through. Collectors are forbidden from using postcards or envelopes that reveal their business as a debt collection agency.
When pursuing legal action, debt buyers must attach the original contract or account agreement and provide a complete chain of assignment to prove ownership of the debt. Legal filings must occur in the judicial district where the consumer signed the contract or resides.
For medical debts, collectors face additional rules. Upon request, they must provide a redacted itemization of charges and are barred from initiating collection efforts during health insurance appeals.
Colorado enforces strict limits on how collectors handle debts. For consumers with multiple debts, collectors must allocate payments according to the consumer's instructions and cannot apply payments to disputed debts.
Violations of the CFDCPA come with serious repercussions. Consumers can sue for actual damages plus up to $1,000 in additional damages. The state administrator may also take action against violators within two years of the violation date.
Collection agencies are required to maintain detailed records and notify the state administrator within 30 days of any changes to their business name, address, surety bond, or collection manager. Agencies must also hold a surety bond as part of their financial responsibility.
For debt professionals, compliance involves more than just following the rules. It requires verifying licensing status, maintaining accurate documentation, and ensuring all collection activities align with legal standards. Non-compliance risks not only legal penalties but also the potential devaluation of debt portfolios if accounts become unenforceable.
Colorado law clearly outlines the timeframes for debt collection. Most consumer debts fall under a six-year limitation period as specified in C.R.S. § 13-80-103.5. However, for oral agreements or situations where essential details about the debt are missing, the period shortens to three years.
Judgments vary in duration: county court judgments are enforceable for six years, while district court judgments last for 20 years, with both being renewable. The limitation period begins with the debtor's last payment, but partial payments or written acknowledgments can reset the clock. Additionally, if a debtor leaves Colorado, the statute may pause until they return.
These guidelines form the groundwork for actionable strategies, as outlined below.
To stay within these legal boundaries, debt professionals should consider the following best practices to maintain both the value and enforceability of their debt portfolios.
"If a debt collector lacks basic information about the debt, such as the amount or the debt's connection to a contract, the statute of limitations drops to three years".
To figure out when the statute of limitations on your debt began in Colorado, start by reviewing the original documents, like the contract or billing statements, to find the debt’s start date. If that’s unclear, look at the date of your last payment or any activity on the account. For unpaid debts, the clock usually starts ticking from the due date or when the contract was breached. If you're unsure, checking the agreement or consulting a legal professional can help clear things up.
In Colorado, participating in a payment plan or negotiating a settlement does not reset the statute of limitations on debt. The clock on the limitations period keeps ticking, even during these discussions.
In Colorado, debt buyers are required to attach a copy of the original contract, account-holder agreement, or another document from the original creditor that proves the consumer agreed to the debt. Additionally, if relevant, they must include supporting documents like a redacted breakdown of charges or recent transaction records when initiating a lawsuit.
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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