Colorado Supreme Court Ruling Raises Proof Requirements for Debt Collectors
A new Colorado Supreme Court ruling could change what debt collectors and collection companies must show before taking consumers to court over unpaid debts.
The ruling reinforces requirements under the Colorado Fair Debt Collection Practices Act and clarifies that debt collectors must provide original evidence of a debt before filing a lawsuit. According to 9News legal expert Whitney Traylor, the court’s decision strengthens the burden of proof on debt collectors and gives consumers greater protection in debt collection cases.
Court Reinforces Existing Debt Collection Law
Speaking on 9News, Traylor explained that the ruling does not create an entirely new law. Instead, it reinforces what the Colorado legislature had already set out under the state’s debt collection law.
He said debt collectors must be able to show original evidence that a debt exists before they can sue a consumer. This includes proving that the debt is legitimate and that the company attempting to collect it has the legal right to do so.
Debt collection cases often involve debts that have been sold from an original creditor to a third-party debt collector. For example, if a credit card company is unable to collect a debt, it may sell that debt to a collection company for a reduced amount. The debt collector then attempts to recover more than it paid for the debt.
In such cases, the court’s ruling emphasizes that collection companies must be able to show both the original debt and the chain of ownership. This means they must show how the debt moved from the original creditor to the company filing the lawsuit.
What the Ruling Means for Consumers
The ruling is being viewed as a win for consumers because it requires debt collectors to provide stronger proof before moving forward with legal action. If a collector cannot prove that the debt is valid or that it has the right to collect it, pursuing a lawsuit may create unfair consequences for the consumer.
The decision means debt collectors must show that the debt is legitimate and that the consumer actually owes the amount being claimed. This added requirement may help reduce cases where consumers face lawsuits based on incomplete or unclear records.
However, the ruling does not mean that consumers no longer have to pay outstanding debts. Traylor clarified that people may still be required to pay debts they legally owe. The key change is that debt collectors must provide sufficient proof before bringing a case to court.
Burden of Proof Remains with the Collector
The ruling also highlights a basic principle of court cases: the plaintiff has the burden of proof. In debt collection lawsuits, the plaintiff is usually the debt collector or collection company filing the case.
Before proceeding with a lawsuit, the collector must be able to provide the required documents and evidence.
A debt buyer’s failure to attach the required documents may expose it to a defence, counterclaim, damages, costs, and attorney fees under Colorado law. Consumers who receive a complaint must still comply with applicable court deadlines.
This clarification could affect how collection companies prepare cases in Colorado. They may need to review documentation more carefully before filing lawsuits and ensure they have records showing the origin and transfer history of the debt.
Possible Impact on Debt Collection Lawsuits
According to Traylor, the ruling may lead to fewer debt collection lawsuits, particularly in cases where supporting documentation is incomplete or difficult to verify.
The decision also illustrates how courts interpret and clarify legislation passed by lawmakers. By reinforcing the evidentiary requirements set out in Colorado’s debt collection law, the ruling may influence how collection cases are prepared and litigated in the future, particularly when debts have changed hands multiple times.
