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Debt collectors have to clean up their acts under new Colorado law

By JOEY BUNCH 06/12/2017 | updated 8 years ago

One new Colorado law should be music to the ears of those who don’t care for calls from debt collectors, especially for money they don’t owe.

Senate Bill 216 cracks down immediately on “zombie debt,” uncollected or written-off bills the debt collection agencies buy in bulk to try to collect on.

Unfortunately for the public, sometimes those debts have little or no accompanying paperwork, could be in error or even paid off. When they buy debt in bulk, that happens.

The new law says they have to do better, with new state requirements and marching orders, as well as clarifying a two-year statute of limitations on bought debt.

The bill was sponsored by Colorado Springs Republican Sen. Bob Gardner with Democratic House Reps. KC Becker of Boulder and Susan Lontine of Denver.

“This law creates a new system of transparency and accountability for consumers,” Becker, the House majority leader, said in a statement. “It makes sure that consumers are protected against predatory debt buyers, especially when they have fully paid that debt off, yet it continues to haunt them with high interest and penalties.”

Added Lontine: “This truly bipartisan bill created stronger rules so that the debt collection industry runs better and consumers are protected from ‘zombie debt’ – debt that never dies, a true nightmare.”

Rich Jones, policy director of the progressive-leaning Bell Policy Center in Denver, was the legislation’s chief proponent.

“The business of buying and selling consumer debts written off by the original collector with the aim of collecting what is owed has expanded considerably in recent years,” Jones told the Senate Judiciary Committee in April. “Debt buyers purchase the original debt for cents on the dollar and attempt to collect the full amount. In many cases, they purchase spreadsheets that contain limited information on the name of the creditor, the amount of the debt and the person’s last known address.”

Jones’ full testimony is available here.

JOEY BUNCH

Reporter

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