December 2, 2023

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Statute of Limitations on Debt Colorado: Everything You Need to Know

Debt is an inevitable part of life for most people. Whether it’s from student loans, credit card bills, medical bills, or personal loans, debt can be overwhelming and stressful. However, the good news is that in Colorado, there is a statute of limitations on debt. This means that after a certain period of time has passed, a creditor cannot sue you for payment of unpaid debt. In this article, we will cover everything you need to know about the statute of limitations on debt in Colorado.

What is the Statute of Limitations on Debt in Colorado?

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The statute of limitations on debt in Colorado is the time limit in which a creditor can sue you for unpaid debt. In the case of written contracts and promissory notes, the statute of limitations is six years from the date of the last payment or the date of default, whichever is later. In the case of open accounts like credit cards, the statute of limitations is three years from the date of default.

It is important to note that the statute of limitations only applies to legal action. A creditor can still attempt to collect the debt outside of court, but they cannot use legal means to force you to pay. They can ask you to pay your debt voluntarily, but they cannot threaten legal action or garnish your wages.

How Does the Statute of Limitations Work?

Once the statute of limitations has passed, you are no longer legally obligated to pay the debt. However, the debt will remain on your credit report for seven years from the date of default. This means that it can still negatively impact your credit score for a long time.

If a creditor tries to sue you after the statute of limitations has passed, you can use it as a defense in court. However, you must appear in court and raise the defense, or the court may still find in favor of the creditor.

It is important to note that some debts are not subject to the statute of limitations. These include tax debts, court fines and fees, child support, and student loans.

What Happens If You Reset the Statute of Limitations?

If you make a payment on a debt that has passed the statute of limitations, the clock is reset, and the statute of limitations starts over from zero. This means that the creditor has another six or three years to sue you for payment.

In addition, if you acknowledge the debt in writing, such as by sending a letter or email stating that you intend to pay the debt, the statute of limitations may restart. This is why it is important to be careful when communicating with creditors about old debts.

What Should You Do If a Creditor Contacts You About an Old Debt?

If a creditor contacts you about an old debt, the first thing you should do is check the statute of limitations. If it has passed, you are not legally obligated to pay the debt. However, you should also check your credit report to ensure that the debt has been marked as “discharged” or “settled.”

If the debt has not been marked as discharged or settled, you can dispute it with the credit reporting agencies. Once a debt is disputed, the credit reporting agencies have 30 days to investigate and remove any inaccuracies.

If the debt is still within the statute of limitations, you should consider your options carefully. You can negotiate with the creditor to settle the debt for less than the full amount, or you can try to set up a payment plan to pay off the debt over time.

FAQs

Q: What is the statute of limitations on debt in Colorado?
A: The statute of limitations on debt in Colorado is six years for written contracts and promissory notes, and three years for open accounts like credit cards.

Q: Can a creditor still attempt to collect a debt after the statute of limitations has passed?
A: Yes, a creditor can still attempt to collect a debt after the statute of limitations has passed, but they cannot sue you for payment.

Q: What happens if you reset the statute of limitations by making a payment?
A: If you make a payment on an old debt, the statute of limitations starts over, and the creditor has another six or three years to sue you for payment.

Q: Are all types of debt subject to the statute of limitations?
A: No, some types of debt are not subject to the statute of limitations, including tax debts, court fines and fees, child support, and student loans.

Q: What should I do if a creditor contacts me about an old debt?
A: Check the statute of limitations, and if it has passed, dispute any inaccuracies on your credit report. If the debt is still within the statute of limitations, consider negotiating with the creditor to settle the debt for less than the full amount or setting up a payment plan to pay off the debt over time.

In conclusion, the statute of limitations on debt in Colorado is a helpful tool for individuals dealing with old, unpaid debts. By understanding the statute and your rights, you can protect yourself from illegal debt collection practices and negotiate effective solutions with creditors. Remember to always review your credit reports and communicate responsibly with creditors to stay informed about your debt situation and avoid resetting the statute of limitations.

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Article Summary:

Colorado has a statute of limitations on debt, which puts a time limit on when creditors can sue consumers for unpaid debt. The statute of limitations for written contracts and promissory notes is six years from the date of the last payment or the date of default, whichever is later. The statute of limitations for open accounts, like credit cards, is three years from the date of default. It is important to note that the statute of limitations only applies to legal action and some debts, like tax and student loan debts, are not subject to the statute of limitations. If a consumer acknowledges the debt in writing or makes a payment, the statute of limitations may reset. Consumers should check the statute of limitations and their credit reports if a creditor contacts them about an old debt.

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