Effective June 29, 2020, Colorado has enacted a new law implementing a temporary moratorium on “extraordinary” debt collection activities and exempting certain property from levy and sale under a writ of attachment or execution. The bill was signed into law by Governor Jared Polis as part of a package of bills passed to help Colorado residents recover from the COVID-19 pandemic.
According to the law, “An extraordinary collection action is defined as an action in the nature of a garnishment, attachment, levy, or execution to collect or enforce a judgment on a debt as defined under the ‘Colorado Fair Debt Collection Practices Act’ (FDCPA).” Before initiating an extraordinary collection action, judgment creditors are required to send notice “explaining that the judgment debtor can temporarily suspend the collection action if the debtor is facing financial hardship as a result of the COVID-19 emergency.”
To exercise their right to suspend debt collection, debtors need only notify the judgment creditor that they are experiencing hardship as a result of COVID-19. “The judgment debtor is not required to provide additional documentation to the judgment creditor.”
The moratorium will remain in effect through at least November 1, 2020. Additionally, the administrator of the Uniform Consumer Credit Code is authorized to extend the law through February 1, 2021, if the administrator finds that the extension is necessary to further protect residents of Colorado from economic hardship resulting from COVID-19.
The law also exempts “up to $4,000 cumulative in a depository account or accounts in the debtor’s name . . . from levy and sale under a writ of attachment or execution” through February 1, 2021. Finally, the law states an attempt to collect amounts in contravention of this provision “is an unfair or unconscionable debt collection practice for the purposes of the FDCPA.”