The draft bill would significantly modify student loan collections for licensed servicers in the state. Editor’s note: This article is available for members only.
2/11/2021 14:00
Colorado’s legislature is on the brink of considering a bill to expand the Colorado Student Loan Servicers Act, and ACA International is seeking input from members who are licensed for student loan servicing in the state.
The bill is expected to be introduced the week of Feb. 16.
In draft form, it would expand the existing Colorado Student Loan Servicers Act, which applies only to persons who service student loans, by adding a section covering private lenders, creditors and collection agencies in connection with those student education loans that are not made, insured or guaranteed under federal law and that are used for postsecondary education.
The bill would also:
- Require lenders to grant a release to cosigners if certain conditions are met, including 12 months of consecutive, on-time payments, and to ensure that cosigners have access to all documentation and records related to the loan they have cosigned;
- Expand disability discharge requirements so that a borrower or cosigner may be released from repayment obligations if permanently disabled;
- Prohibit “robo-signing” of documents used in collection lawsuits and require specific evidence of loan origination and chain of ownership of the debt before a loan creditor or collection agency may commence legal proceedings;
- Prohibit auto defaults, in which a loan is declared immediately due and payable upon the death or bankruptcy of a cosigner even when there has been no default in payments; and
- Provide legal recourse for borrowers who are harmed by predatory acts and practices of a lender, creditor or collection agency. A violation of the new part of the draft bill is defined as a deceptive trade practice under the Colorado Consumer Protection Act.
ACA is seeking member input on the bill and looking to identify members that have creditor clients working in the private student loan space in Colorado. Contact Andrew Madden, ACA’s vice president of state unit and government affairs, at [email protected] for more information and to share your input.
Collection Proposals in Ohio and Colorado
ACA continues to monitor about 350 state bills that would impact the accounts receivable management industry if enacted.
In other state news, Colorado Gov. Jared Polis signed a bill that extends certain limitations on “extraordinary collection actions” through June 1, 2021.
Polis originally signed SB 211 on extraordinary collection actions into law in June 2020. The law “prohibits a judgment creditor from initiating or maintaining a new extraordinary collection action, except in accordance with the requirements of SB 211,” ACA previously reported.
In Ohio, the statute of limitations bill is progressing in the Senate after a Feb. 3 vote in the Senate Judiciary Committee. The next hearing is Feb. 16.
ACA and the Ohio Receivables Management Association continue to work with legislative leaders in the state to ensure favorable language for the industry in the bill, which seeks to reduce the statute of limitations on written and oral contracts to six and four years, respectively, and define consumer transactions and assign them a six-year statute of limitations, ACA previously reported.
The Ohio Legislature is also considering a bill that would stop collection of student and medical debt owed to state universities and hospitals.
H.B. 32 would freeze interest accrual and collection of fees on all outstanding debt owed to those entities.
As a reminder to members, the California Department of Financial Innovation (DFPI) is seeking stakeholder input on regulations to implement the state’s Consumer Financial Protection Law (CCFPL). Comments are due March 8.
And Washington state’s remote work rule will be in effect Feb. 17, the same date the temporary guidance expires.