Colorado Debt Statute of Limitations: What You Need to Know

You don't have to drag your debts around forever.

Creditors only have a limited amount of time to take you to court for unpaid debt. This rule is known as the statute of limitations, and each state sets its own guidelines regarding the time limit for various types of debt. The statute of limitations in Colorado works a bit differently than it does in many states.

Types of Debt

For legal purposes debt is broken down into four categories. The first is written contracts, which includes bills, rental agreements, and most types of loans. The second category is oral contracts, which refers to legally binding agreements that were made without a written agreement. A third category is promissory notes, which are similar to written contracts but with a detailed description of the payment schedule, interest, and penalties. The fourth covers open accounts, which include home equity lines of credit, credit cards, and other revolving accounts.

Statute of Limitations in Colorado

Unlike many states that set a variable time limit depending on the type of debt, the statute of limitations in Colorado is six years for all debts. The clock starts on the day you default. This usually is the date of the last payment you missed. However some types of credit, such as credit cards, start counting 30 days after your last payment was due.

Continued Collection Efforts

Even once the statute of limitations has expired, a creditors is allowed to continue to try to collect the obligation. However, since it can no longer win a lawsuit against you in court as long as you respond to any complaint by citing the expired statute of limitations as an affirmative defense, it is legally barred from threatening to sue you. Keep in mind that admitting to ownership or agreeing to make payments on the debt will restart the statute of limitations, and the creditor will be allowed to file a lawsuit against you once again.

Credit Reporting

In addition to continued to collection efforts, related entries on your credit report will remain for a full seven years, even after the statute of limitations has passed. If the debt is not being reporting correctly, however, you can dispute and correct the information with the credit bureaus without restarting the statute of limitations.