Colorado Senate Bill 20-211 – Limitations on Extraordinary Collections Actions

A bill went flying through the Colorado legislature this month and if you blinked, you missed your opportunity to weigh in on the outcome of this legislation. Senate Bill 20-211 “prohibits a judgment creditor from initiating a new extraordinary collection action from the effective date of the bill through November 1, 2020” and potentially through February 1, 2021. This is to protect those Colorado debtors who have been negatively affected by the COVID pandemic and are experiencing financial hardship. By the way, for this bill an extraordinary collection action (ECA) 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 Collections Practices Act”. As of now, this does not appear to include credit bureau reporting on any account that has been placed for collection and meets the standards for reporting.

The bill sponsored by Senator’s Faith Winter and Julie Gonzales and supported by House Representative Leslie Herod, was proposed on 6/1 and was revised 2 times before passing with a 41-24 vote on Friday morning, 6/12/20. Revenue Enterprises, along with numerous other agencies, worked with the American Collections Association and the Associated Collection Agencies, Inc. of Colorado, Wyoming and New Mexico to oppose the bill in its original form.  The ACA and their lobbyists worked tirelessly with the legislature to amend the bill to make it more reasonable for those providers; businesses; industries; and agencies affected, while still protecting those consumers who have experienced financial hardship because of the COVID emergency.  We thank them for their work and are proud to be a part of this movement!

A brief summary of the impacts this amended legislation presents are described below:

• A judgment creditor (meaning a judgment to enforce collection of a debt must have been granted by the Courts) cannot initiate a new extraordinary collection action from the effective date of the bill through 11/1/20; but an order extending the prohibition up to 2/1/21 may be granted as necessary.
• A judgment creditor shall not initiate or maintain a new extraordinary collection action during this period.
• Judgment creditors are to provide a written notice to the judgment debtor at least ten (10) days, but not more than sixty (60) days, prior to the execution or service of a writ or legal process intended to effect the extraordinary collection action
• The notice sent to judgment debtors should be in at least 16-point font and include the following statement: “YOU HAVE THE RIGHT TO TEMPORARILY SUSPEND THIS COLLECTION ACTION IF YOU ARE FACING FINANCIAL HARDSHIP DUE TO THE COVID-19 EMERGENCY.“ The notice must include the Judgement Creditor’s Name and address; the case number and a phone number where the judgment creditor may be reached. Additional verbiage must be included notifying the debtor of the judgment creditor’s intention to execute a collection action against the debtor and outlining the debtor’s right to temporarily suspend this action due to financial hardship due to the COVID-19 emergency directly or indirectly
• Debtors may notify the judgment creditor in writing or by phone of the hardship and are not required to provide proof of hardship
• Additional information must be provided to the debtor on how they are to notify the judgment creditor of the need for a temporary suspension of collection action
• The temporary suspension of collection action is not a waiver of the obligation to pay or debt forgiveness
• Interest may continue to accrue the judgment debt during the suspension period
• Debtors may enter a voluntary repayment plan with the creditor, but are not required to do so

With this legislation, what can healthcare providers and their collections partners do to help mitigate the impact for Colorado Healthcare Providers and other businesses pursuing outstanding debt? The answer is to work collaboratively with all qualifying consumers and patients with compassion and respect.

This temporary suspension does allow for continued attempts to work with consumers to understand and establish a plan for repayment. We can continue to use our tools to reach out to those who are not responding. Litigation can be filed during this period; however, garnishments cannot be utilized to enforce actions. New and creative ways will need to be identified and implemented to encourage consumers and patients to work with you and your agency partners to discuss their accounts. Perhaps this pause, along with expanded outreach efforts, will help more consumers and patients to see some collection agencies as a service that helps them to understand their amount due and work out ways to protect their credit and get a payment plan that allows them to continue to afford the necessities in life, rather than as a threat to their financial wellbeing. This time will surely test all of us in the industry to think of how we can better work with patients and consumers and here at REL, we will definitely be engaging to consider new ways to work with consumers and patients.

Please note that this article is for informational purposes only and offers no suggestion of legal advice or of activities that should be taken to adhere to these regulations.  To access the bill directly through the Colorado General Assembly website at https://leg.colorado.gov/sitewide-search?search_api_views_fulltext=SB20-211

References:

Colorado General Assembly. (2020, June 17) SB20-211: Limitations On Extraordinary Collections Actions, Concerning limitations on certain debt collection actions. Retrieved from https://leg.colorado.gov/bills/sb20-211