Colorado SB 216, a legislative proposal negotiated by RMA, consumer advocates, and other industry participants, was sent to the Governor earlier this week after having passed both houses of the Legislature. The adoption of this bill was necessary to prevent the repeal of the Colorado Fair Debt Collection Practices Act and the state’s licensing of collection agencies. Upon the Governor’s signature, which is expected, the Colorado FDCPA will be extended to 2028 before another mandated sunset review.
Debt buying companies and collection agencies that collect on purchased debt need to take special note of this bill as it includes new statutory provisions concerning the collection of delinquent and defaulted debt that is purchased or sold on or after January 1, 2018. While these new provisions are similar to those that have been adopted in other states in recent years (i.e. California, Connecticut, and Minnesota), they will necessitate some changes in company and agency operations. Here is a summary of the new provisions:
When bringing a legal action on a debt owned by a debt buyer, the chain of title (i.e. copy of each assignment showing debt buyer is owner) and one of the following must be attached to the complaint:
- A copy of the contract, account-holder agreement, or other writing from the original creditor or the consumer evidencing the consumer’s agreement to the debt
- For medical debt, a copy of a redacted itemization of charges
- If a signed writing evidencing the debt does not exist, a copy of a document provided to the consumer while the account was active must be attached; for credit cards this can be the most recent monthly statement showing a purchase, payment, or balance transfer
- If a claim is based on an electronic transaction, where a signed (signature presumably can be wet or electronic) writing never existed, a copy of the records created during the transaction evidencing the consumer’s agreement, the date and terms of the transaction, and information provided by the consumer during the transaction
Prior to entry of a default judgment, the following evidence must be submitted to the court to establish the “amount and nature” of the debt:
- Charge-off account number
- Name of charge-off creditor
- Amount due at charge-off OR if not charged-off, an itemization of pre-charge-off balance
- Itemization of post-charge-off balance
- Date of consumer’s last payment OR date of consumer’s last transaction
- If not a revolving credit account, the date the debt was incurred
As part of the negotiating process, RMA through its lobbyist was also able to insert an exemption from existing state bonding requirements for debt buyers as long as they do not also operate as a third-party collection agency.
RMA would strongly recommend that its members share this member alert with any debt buyer, collection agency, and law firm it transacts business with as well as those internally responsible for compliance, purchase/sale, and legal operations.
This Alert is intended for Members of the Receivables Management Association International (formerly DBA International) and is for informational purposes only and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.