Colorado Statute Of Limitations On Debt

Statute Of Limitations On Debt Colorado

A lender can pass debts or loans to a collection agency for pennies on the dollar to save the lender debt collection expenses. However, the records that they pass to the collection agency may be incomplete which is actually not illegal. The collection agency can then begin collection efforts for the loans or debts that they bought. But if the collection agency’s attempt to collect the debt fails the agency can sue the debtor within six years. This is because Colorado’s statute of limitations on debt is six years. An experienced bankruptcy lawyer can look into your case to determine whether the statute of limitations for the debt has “run out”, or whether bankruptcy is the right path for you.

What To Do When Debt Buyers Sue You

Debt buyers are constantly hounding Coloradans for debts that they may not be able to pay. When you are notified that a collection agency has sued you, read and respond to the lawsuit as soon as possible. Read and review the paperwork to get the response deadline, confirm that you owe that debt, and find out if the collection amount is correct. Most people don’t know that ignoring a lawsuit can result in a court making a default judgment. What often happens with default judgments is that the debtor’s wages are garnished or a lien is placed on their property.

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Consider Filing For Bankruptcy

Colorado Statute Of Limitations On DebtInstead of putting up with aggressive actions of collection agencies you can choose to file for bankruptcy. Depending on your current income and expenses, you can either file for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. Your lawyer may recommend you file for a Chapter 7 if you have passed the means test. A Chapter 7 bankruptcy basically involves the liquidation of your non exempt assets and using the proceeds to pay your creditors. However, you may get to keep your car, furniture or house. In a Chapter 13 bankruptcy you have to create a 3-5 year loan repayment plan that will pay off all or most of your debt. Filing a Chapter 13 bankruptcy may also prevent a house foreclosure. 

Mistakes By Collection Agencies

Incomplete records are among the biggest challenges that collection agencies face when they buy debt from lenders. For this reason, they often make mistakes such as targeting people who don’t owe any debt or asking for the wrong debt amount. Sometimes consumers are harassed for debts they already paid. Another mistake they may make is coming to collect debt when the statute of limitations on that debt has already expired. 

Your bankruptcy lawyer can review your case to find out if the collection agencies made any of these mistakes. If they did make a mistake, your lawyer can use those mistakes as defenses when the collection agency sues you. The Fair Debt Collection laws in Colorado protect consumers from agencies that use misleading and unfair practices. It prohibits these agencies from disclosing debt to parties that are not obligated to pay the debt.

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