Colorado Extends State FDCPA, Expanding the Act to Cover Debt Buyers
6/7/2017 1:50 PM
The legislation extends to the life of the Colorado Fair Debt Collection Practices Act by 11 years, deems debt buyers to be collection agencies, and requires additional documentation for legal actions on purchased debts.
Colorado has enacted S.B. 216, which extends the life of the Colorado Fair Debt Collection Practices Act (FDCPA) until Sept. 1, 2028, and expands the act’s scope to include debt buyers.
The new law clarifies that debt buyers are collection agencies for purposes of the Colorado FDCPA, and that the act will apply to debt buyers for consumer debts sold or resold on or after Jan. 1, 2018. Under the newly revised law, debt buyer is defined as “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.” Prior to this legislation, debt buyer was not specifically defined under the state act. While the act extends the Colorado license requirement and other collection requirements to debt buyers, it exempts debt buyers from the act’s bond requirements so long as the debt buyer does not provide third-party collection services.
The new law establishes documentation and ownership requirements for legal actions on purchased debts. When bringing a legal action on a debt owned by a debt buyer, a debt collector or collection agency is required to attach “a copy of the contract, account-holder agreement, or other writing from the original creditor or the consumer evidencing the consumer's agreement to the original debt.” For medical debts, the act requires a copy of a redacted itemization of charges to be attached.
In the absence of signed writing evidencing the original debt, the debt collector is required to attach to the complaint a copy of the document provided to the consumer while the account was active, demonstrating that the debt was incurred by the consumer or, for a credit card debt, the most recent monthly statement recording a purchase transaction, payment, or balance transfer. The act also specifies the required documentation for electronic transactions without a signed writing.
A debt collector or collection agency must also attach a copy of the assignment or other writing establishing that the debt buyer is the owner of the debt. A complete chain of title must be provided for debts that have been assigned more than once.
Prior to issuing a default judgement against a consumer on a purchased debt, the amended law requires a plaintiff to file evidence with the court satisfying the state's evidentiary rules that establishes the amount and nature of the debt, including the original account number and creditor at charge-off; the amount due at charge-off; an itemization of post charge-off interest (if any); the date of the last payment or transaction; and the date the debt was incurred (unless the account is a revolving credit account). An affidavit is insufficient to meet the new documentation requirements for legal actions.
Additionally, the new law clarifies that a two-year statute of limitations applies to administrative actions to enforce liability and a one-year statute applies to private actions by consumers.
The law became effective on June 1, 2017, but the sections pertaining to debt buyers and documentation for lawsuits do not become effective until Jan. 1, 2018.
The Associated Collections Agencies (CO/ WY/ NM unit) were very involved in the rewrite of the Colorado FDCPA, which was set to expire this year. After months of meetings and negotiations with key legislators, the Department of Revenue, the Office of the Attorney General and other interested stakeholders, the comprehensive package was passed by the legislature and signed by the governor. Tom Romala, the unit’s long time Colorado legislative chair, said that this was the busiest legislative cycle he can remember in 30 years. For more information on the newly amended law, please review Colorado S.B. 216.
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Photo: Colorado State Capitol