SB 12-069: Debt Recovery Statute of Limitations
Office of Sen. Mike JohnstonColorado General Assembly | 200 E. Colfax Avenue | Denver, CO 80203 | 303.866.4864FACT SHEET MEMORANDUMSB 12-069 Debt Recovery Statute of Limitations Rep. Gardner & Sen. Tochtrop Staff Name: Kayla Smith What the Bill Does: SB 12-069 specifies a statute of limitations for certain civil actions related to the collection of debt. A statute of limitations establishes a time limit for suing in a civil case, based on the date when the claim accrued. After the statute of
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Office of Sen. Mike Johnston
Colorado General Assembly | 200 E. Colfax Avenue | Denver, CO 80203 | 303.866.4864
FACT SHEET MEMORANDUM
SB 12-069 Debt Recovery Statute of Limitations Rep. Gardner & Sen. Tochtrop Staff Name: Kayla Smith What the Bill Does: SB 12-069 specifies a statute of limitations for certain civil actions related to the collection of debt. A statute of limitations establishes a time limit for suing in a civil case, based on the date when the claim accrued. After the statute of limitations passes, the claim is barred from future suit. Under Colorado law, the statute of limitations in actions for “debt, obligation, money owed, or performance,” begins to run on the date that the debt, obligation, money owed, or performance was originally due.1 If the cause of action is based on an “open account for goods or services,” then the statute of limitations begins to run “at the time of the last item of goods or services proved in such account.”2 Once the statute of limitations has passed, a borrower no longer has a legal obligation to repay his debt.3 Currently, the statute of limitations is three years for “all contract actions, including personal contracts and contracts under the Uniform Commercial Code.”4 However, statute also provides a six-year statute of limitations for actions to collect liquidated debt and unliquidated debt in a determinable amount, in addition to “all actions for the enforcement of rights set forth in any instrument securing the payment of or evidence any debt.”5 SB 12-069 would amend this provision to specify a six-year statute of limitations for causes of action based on: debt for care given or delivered; debt for services rendered; debt for money lent; debt for money paid; debt for money had and received; debt for goods sold and delivered; and debt for open or book account, or account stated. Instead of retaining the general language that exempts “liquidated debt or an unliquidated, determinable amount” from the three-year statute of limitations, the bill adds a specific list of the types of debt actions that should instead have a six-year statute of limitations.
1 2
Colo. Rev. Stat. Ann. § 13-80-108(4) (West 2012). Id. § 13-80-108(5) (West 2012). 3 Jessica Silver-Greenberg, Bringing Expired Debt Back to Life, WALL ST. J. (Dec. 31, 2011). 4 Colo. Rev. Stat. Ann. § 13-80-101(1)(a) (West 2012). 5 Id. § 123-80-103,5(1)(a) (West 2012).
DRAFT 1/28/2012 9:22 PM
For a complete list of fact sheets, visit www.mikejohnston.org/in-the-legislature.
Colorado Context: The Colorado State Judicial Branch does not specifically provide information on the total number of cases related to all forms of debt collection. However, of the 125,5976 total civil cases filed in Colorado District Court in FY 2011:7 6,671 cases were classified as “money” cases, or civil cases in which the plaintiff was suing for money owed. 572 cases were classified as “note” cases, or civil cases “in which the plaintiff claims defendant has signed a note (a borrower’s legally binding written promise to repay a debt to a lender on a specified date) and has defaulted on the payment for that note.” 295 cases were classified as “goods sold and delivered,” or civil cases in which the plaintiff claims that the defendant has failed to pay for products purchased. National Context: Although all states have a statute of limitations for debt recovery actions, no information is available at this time regarding whether states have chosen to lengthen or shorten their statutory time frames. Bill Provisions: Specifies that legal actions for the recovery of debt based on the following claims are subject to a six-year statute of limitations: o debt for care given or delivered, o debt for services rendered, o debt for money lent, o debt for money paid, o debt for money had and received, o debt for goods sold and delivered, o and debt for open or book account, or account stated Provides that an action disputing or challenging the reasonableness of a debt recovery claim will not cause the amount sought in the case to be considered unliquidated or undeterminable Fiscal Impact: No fiscal note for SB 12-069 is available at this time.
6
Colorado Judicial Branch, Annual Statistic Report FY 2011 20 (2012), available at http://www.courts.state.co.us/Administration/Custom.cfm?Unit=annrep&Page_ID=358. 7 Id.
DRAFT 1/28/2012 9:22 PM
For a complete list of fact sheets, visit www.mikejohnston.org/in-the-legislature.
Colorado General Assembly | 200 E. Colfax Avenue | Denver, CO 80203 | 303.866.4864
FACT SHEET MEMORANDUM
SB 12-069 Debt Recovery Statute of Limitations Rep. Gardner & Sen. Tochtrop Staff Name: Kayla Smith What the Bill Does: SB 12-069 specifies a statute of limitations for certain civil actions related to the collection of debt. A statute of limitations establishes a time limit for suing in a civil case, based on the date when the claim accrued. After the statute of limitations passes, the claim is barred from future suit. Under Colorado law, the statute of limitations in actions for “debt, obligation, money owed, or performance,” begins to run on the date that the debt, obligation, money owed, or performance was originally due.1 If the cause of action is based on an “open account for goods or services,” then the statute of limitations begins to run “at the time of the last item of goods or services proved in such account.”2 Once the statute of limitations has passed, a borrower no longer has a legal obligation to repay his debt.3 Currently, the statute of limitations is three years for “all contract actions, including personal contracts and contracts under the Uniform Commercial Code.”4 However, statute also provides a six-year statute of limitations for actions to collect liquidated debt and unliquidated debt in a determinable amount, in addition to “all actions for the enforcement of rights set forth in any instrument securing the payment of or evidence any debt.”5 SB 12-069 would amend this provision to specify a six-year statute of limitations for causes of action based on: debt for care given or delivered; debt for services rendered; debt for money lent; debt for money paid; debt for money had and received; debt for goods sold and delivered; and debt for open or book account, or account stated. Instead of retaining the general language that exempts “liquidated debt or an unliquidated, determinable amount” from the three-year statute of limitations, the bill adds a specific list of the types of debt actions that should instead have a six-year statute of limitations.
1 2
Colo. Rev. Stat. Ann. § 13-80-108(4) (West 2012). Id. § 13-80-108(5) (West 2012). 3 Jessica Silver-Greenberg, Bringing Expired Debt Back to Life, WALL ST. J. (Dec. 31, 2011). 4 Colo. Rev. Stat. Ann. § 13-80-101(1)(a) (West 2012). 5 Id. § 123-80-103,5(1)(a) (West 2012).
DRAFT 1/28/2012 9:22 PM
For a complete list of fact sheets, visit www.mikejohnston.org/in-the-legislature.
Colorado Context: The Colorado State Judicial Branch does not specifically provide information on the total number of cases related to all forms of debt collection. However, of the 125,5976 total civil cases filed in Colorado District Court in FY 2011:7 6,671 cases were classified as “money” cases, or civil cases in which the plaintiff was suing for money owed. 572 cases were classified as “note” cases, or civil cases “in which the plaintiff claims defendant has signed a note (a borrower’s legally binding written promise to repay a debt to a lender on a specified date) and has defaulted on the payment for that note.” 295 cases were classified as “goods sold and delivered,” or civil cases in which the plaintiff claims that the defendant has failed to pay for products purchased. National Context: Although all states have a statute of limitations for debt recovery actions, no information is available at this time regarding whether states have chosen to lengthen or shorten their statutory time frames. Bill Provisions: Specifies that legal actions for the recovery of debt based on the following claims are subject to a six-year statute of limitations: o debt for care given or delivered, o debt for services rendered, o debt for money lent, o debt for money paid, o debt for money had and received, o debt for goods sold and delivered, o and debt for open or book account, or account stated Provides that an action disputing or challenging the reasonableness of a debt recovery claim will not cause the amount sought in the case to be considered unliquidated or undeterminable Fiscal Impact: No fiscal note for SB 12-069 is available at this time.
6
Colorado Judicial Branch, Annual Statistic Report FY 2011 20 (2012), available at http://www.courts.state.co.us/Administration/Custom.cfm?Unit=annrep&Page_ID=358. 7 Id.
DRAFT 1/28/2012 9:22 PM
For a complete list of fact sheets, visit www.mikejohnston.org/in-the-legislature.
