On January 21, Colorado Governor Jared S. Polis signed Senate Bill 21-002 into law. This bill modifies the limitations of certain debt collection actions enacted in Senate Bill 20-211, most notably extending the moratorium on extraordinary collection actions from February 1, 2021 to June 1, 2021.
In more detail, Senate Bill 21-002 states that a judgment creditor shall not initiate or maintain a new extraordinary collection action except in accordance with the requirements set forth in the bill. A court of record shall deny without prejudice any request for issuance of a writ or legal process to effect an extraordinary collection action if the court finds that the action does not comply with the requirements of the bill and that the same constitutes an unfair and unconscionable means of collecting a debt under the Colorado Fair Debt Collection Practices Act.
As stated in Colorado law, an extraordinary collection action is an action in the nature of a garnishment, attachment, levy, or execution to collect or enforce a judgment on a debt. Additionally, a debt is defined as any obligation or alleged obligation of a consumer to pay money arising out of a transaction, whether or not the obligation has been reduced to judgment; however, it is important to note that the term debt does not include a debt for business, investment, commercial, or agricultural purposes or a debt incurred by a business.
The requirements mentioned in the bill include that a judgment creditor must provide notice to the debtor prior to commencing a proceeding intended to effect an extraordinary collection action. This notice must be written and provided at least 10, but not more than 60 days prior to the commencement of an action. Additionally, the notice must include very specific language — detailed in section 24-33.5-704.3(5)(a)(I) — and it must be sent to the debtor’s last known address with an additional copy of the notice served with the writ of garnishment.
The required language in the notice explains that the debtor can suspend the extraordinary collection until June 1, 2021 if the debtor is facing financial hardship as a result of the COVID-19 emergency. To invoke this right of postponement, the debtor must notify the creditor that the debtor is experiencing hardship as a result of the COVID-19 emergency and that notice must include the debtor’s full name, case number, and one of the following — date of birth, Social Security number, physical and mailing addresses, or the judgment creditor’s internal account number or identifier; however, no documentation of any kind is required.
Finally, if the debtor does not respond to the initial notice provided by the creditor, the creditor must provide a second notice prior to commencing a proceeding.
Judgment creditors in Colorado will need to review this new bill and take steps to ensure strict compliance with its terms.