Colorado Statute Of Limitations For Debt
Worried about the Colorado statute of limitations for debt? Let me tell you a story.
Today I got a call from a panicked single mother. She had just gotten off the phone with someone who claimed she owed money to for an apartment she had to move out of before the lease was up several years ago.
The caller told her that if she didn’t make a payment, they were going to send the account to a lawyer. She hadn’t heard from them for a long time and thought they had decided to let what she owed go. She wanted to know if they could still sue her for the debt.
Unfortunately, I had to give her some bad news.
Most debts in Colorado have a statute of limitations of six years.
Colorado Revised Statute 13-80-103.5 sets forth the following time limitations for the collection of a debt:
(1) The following actions shall be commenced within six years after the cause of action accrues and not thereafter:
(a) All actions to recover a liquidated debt or an unliquidated, determinable amount of money due to the person bringing the action, all actions for the enforcement of rights set forth in any instrument securing the payment of or evidencing any debt, and all actions of replevin to recover the possession of personal property encumbered under any instrument securing any debt…
It isn’t unusual for loans or debt to be passed from one owner to another. Sometimes a lender will sell a debt to a collection agency. It saves the lender the expense of trying to collect the debt, and the collection agency can buy the debt for pennies on the dollar.
While it isn’t illegal for a lender to sell its accounts receivable, it also isn’t unusual for the records to be incomplete. Colorado law sets time limits on the period of time after which a person, or collection agency, can no longer sue you to collect a debt.
But the statute of limitations doesn’t restart when a debt is sold. The statute of limitations is based on your actions, not the creditor or debt collector’s.
When Does Colorado Statute Of Limitations For Debt Start?
The six years would typically start at the point you defaulted on the loan or it otherwise came due.
Can The Colorado Statute Of Limitations For Debt Restart?
Yes! And here’s where collectors can get devious. If you acknowledge the debt, the six years can restart. How do you “acknowledge” the debt? One way is to make a payment. The other is to sign an agreement to pay the debt, like a settlement agreement. You might even acknowledge the debt in a phone call where you agree with the collector that you owe the debt.
If the statute of limitations has passed, however, you should be safe from restarting the six years if you acknowledge debt.
Read The Fine Print
I recently had a consultation with a potential client who was anxious about a letter he had gotten for a large debt. He also listed some other debts that he was concerned about but hadn’t heard from any collectors for a long time about them. He mentioned that they were old debts. I started asking him how old he thoughts the debts were. He told me they were more than 10 years old.
Then I took a look at the letter he had gotten. Yes, it was for a debt he owed. And then I turned the letter over and read the fine print. Right there, in black and white, the debt collector acknowledged that the debt was too old for them to hold my potential client legally liable. That, my friends, was the smoking gun.
You can imagine the sigh of relief that came from him when I pointed that language out.
It’s important to read everything when you get a letter about a debt. If you get a call from a debt collector, ask them if the statute of limitations has passed. They may not answer the question, but if they don’t, dig further. Ask them for a physical address. Tell them you don’t want to give any payment information over the phone. Make them prove the debt, especially if you don’t remember it or think you already paid it.
Statute of Limitations vs. Credit Reporting
It’s also important to distinguish the difference between how long someone has to sue you for a debt and how long they can report a bad debt on your credit report. The statute of limitations period in Colorado is shorter than the length of time a creditor can report a bad debt. They can report the debt on your credit report for seven years after the debt has been charged off. “Charged off” is just an accounting term. It doesn’t mean that you aren’t legally liable for the debt. So, the debt can be charged off after a year of you not making any payments, but they can still file a lawsuit for six years after you made your last payment.
Talk To A Denver, Colorado Bankruptcy Lawyer About The Colorado Statute Of Limitations For Debt
If debt collectors are harassing you, bankruptcy can stop their phone calls and letters. It can also kill lawsuits and garnishments. If you would like to learn if bankruptcy is a good option for you, we hope you’ll come in for a free, no-obligation consultation with an experienced Denver, Colorado bankruptcy lawyer. You can call 303.331.3403 or use our online scheduling system to make an appointment.
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