Colorado Debt Collection Laws: Wage Garnishment, Statute of Limitations, and Repossession

A collector cannot touch your paycheck in Colorado just because you fell behind. For ordinary consumer debt, the creditor must first sue you, win a judgment, and then get a court-issued writ of garnishment before your employer withholds anything. That sequence is where most garnishments are actually decided: they usually happen because the person being sued never answered the lawsuit and a default judgment followed automatically. If you take one action from this page, answer any summons you receive, even if you think the debt is too old or belongs to someone else.

Wage Garnishment in Colorado

Colorado's garnishment formula, C.R.S. 13-54-104(2)(a)(I), caps what a creditor can take at the lesser of three numbers: 20% of your disposable earnings for the week, the amount by which your disposable earnings exceed 40 times the federal minimum hourly wage, or the amount by which they exceed 40 times the Colorado minimum hourly wage. Because Colorado's minimum wage is well above the federal $7.25 floor, the state-wage version of the test is almost always the one that actually protects more of a paycheck. With Colorado's minimum wage at $15.16 an hour, the 40-times threshold works out to about $606.40 a week; wages at or below that are untouchable, and above it, no more than 20% can be taken.

Colorado's definition of disposable earnings is broader than the federal one in a reader's favor: it also excludes amounts withheld for health insurance, not just legally required deductions.

A separate Colorado statute, the Uniform Consumer Credit Code at C.R.S. 5-5-106, still states an older 25%-of-disposable-earnings/30-times-minimum-wage formula for consumer credit transactions. That figure has not been updated to match 13-54-104, and a creditor can only take what both statutes allow, so the newer and stricter 13-54-104 formula controls what is actually withheld. Colorado's judicial garnishment forms compute at the 20% figure.

There is no fixed head-of-household exemption in Colorado. Instead, a debtor can file a written objection under C.R.S. 13-54.5-108 and 13-54.5-109 asking the court to exempt whatever amount is actually necessary for living expenses; the court decides case by case rather than applying a set percentage.

Firing protection stronger than federal law

Federal law protects an employee from being fired over a garnishment for any one debt, but offers no protection once a second, different debt is garnished. Colorado goes further. Under C.R.S. 13-54.5-110, an employer may not discharge an employee because a creditor has subjected, or attempted to subject, unpaid earnings to any garnishment, with no limit on the number of debts involved. A worker who is fired in violation of this rule can bring a civil action within 91 days and recover lost wages for up to six weeks, reinstatement, and costs and attorney's fees.

Bank Account Protections

We did not find a Colorado statute creating an automatic, self-executing exemption for money sitting in a bank account, the way some states protect a fixed dollar amount without any filing. If you are facing a bank levy in Colorado, plan to file a claim of exemption promptly and consult the court's self-help resources on what property can be protected.

Federal benefits carry their own separate shield regardless of state law. Social Security, VA, and similar federal benefits that arrive by direct deposit are automatically protected for the trailing two months of deposits under 31 CFR Part 212, and the bank must apply that protection without you filing anything. Benefits paid by paper check and then deposited do not get this automatic treatment and must be claimed as exempt.

Statute of Limitations on Debt in Colorado

Colorado's general contract limitations period is 3 years under C.R.S. 13-80-101(1)(a), which by its own terms covers most contract actions including Uniform Commercial Code claims, except where another statute says otherwise. That exception matters: C.R.S. 13-80-103.5(1)(a) gives a 6-year period to actions to recover a liquidated debt, or an unliquidated but determinable amount of money, and to actions on an instrument that secures or evidences a debt.

Which bucket a given debt lands in decides everything, and this is where Colorado differs from a simple written-versus-oral split. The Colorado Supreme Court's Portercare Adventist Health System v. Lego decision (2012 CO 58) held that an unpaid hospital bill was a «liquidated debt» under 13-80-103.5 because the amount was computable from the hospital's predetermined billing rates, not from a signed contract. Portercare is a hospital-billing case; it does not address credit cards, and no Colorado appellate decision squarely holding that a credit-card balance falls in the 6-year liquidated/determinable bucket was found. The 6-year characterization for credit-card debt is the consensus reading among Colorado consumer-law practitioners, extending Portercare's reasoning by analogy (a card balance is also computable from account records rather than a single signed instrument), and most Colorado collection lawsuits are pleaded and defended on that assumption. But treat it as the well-supported practitioner reading rather than settled case law: do not assume an old card balance is time-barred at the 3-year mark, and do not cite Portercare itself as though it decides the credit-card question, because it does not.

We did not locate a Colorado statute addressing whether a partial payment or written acknowledgment revives an already-expired debt. Colorado's revival practice, if any, appears to rest on common law rather than a codified rule, so treat any claim about payment restarting Colorado's clock with caution, and do not rely on it as a defense strategy without checking current case law.

Time-barred does not mean the debt disappears. A collector can still contact you about an old debt, but under federal Regulation F, 12 CFR 1006.26, a debt collector must not sue or threaten to sue on a debt once the statute of limitations has expired. Credit reporting runs on its own separate clock, roughly seven years, regardless of when the limitations period expires.

What Debt Collectors Can and Cannot Do

The federal Fair Debt Collection Practices Act governs third-party collectors operating in Colorado. They cannot use false, deceptive, or misleading statements, including misrepresenting the amount or legal status of a debt, and cannot threaten to take action they cannot legally take or do not intend to take, 15 U.S.C. 1692e. Regulation F layers on specific call-frequency limits and debt-validation requirements. Colorado has its own Fair Debt Collection Practices Act, C.R.S. 5-16-101 et seq., administered by the Uniform Consumer Credit Code Administrator, whose office sits in the Department of Law under the Attorney General. It reaches collection agencies, solicitors, and debt collectors, and it expressly treats debt buyers and collection attorneys as collection agencies, C.R.S. 5-16-103(3)(e)(I) and (8.5). It does not reach an original creditor collecting its own debts in its own name: C.R.S. 5-16-103(3)(b)(I) excludes an officer or employee of a creditor collecting in the creditor's name, and 5-16-103(3)(b)(VI)(B) excludes activity concerning a debt the collector itself extended, essentially the same carve-out the federal FDCPA has. The narrow exception is a creditor that collects its own debts under another name suggesting a third party is doing the collecting, which the statute does treat as a collection agency, C.R.S. 5-16-103(3)(c).

Car Repossession Rules

Colorado enacted the Uniform Commercial Code's self-help repossession rule at C.R.S. 4-9-609: after default, a secured party may take possession of collateral without judicial process, as long as it can do so without a breach of the peace, a standard the statute does not define and leaves to case law.

Colorado adds a meaningful protection most states do not have. Under the Uniform Consumer Credit Code, C.R.S. 5-5-110 and 5-5-111, when a consumer defaults only by missing payments on a consumer credit transaction, the creditor generally cannot accelerate the debt or repossess the collateral until giving the consumer a notice of the right to cure and waiting 20 days. Curing means paying all the unpaid amounts actually due, without the acceleration, plus any delinquency charges, which restores the consumer's rights as though no default had happened. A creditor only has to give one such cure notice per obligation in any 12-month period, and mobile-home-secured obligations get broader cure rights still.

Colorado also protects occupied manufactured housing specifically: under C.R.S. 4-9-609(d), a secured party cannot use self-help repossession against a manufactured home or trailer coach used as a residence unless there is clear and convincing evidence the resident has vacated, abandoned it, or voluntarily surrendered it.

Servicemembers get an additional federal layer. For an installment contract entered into before military service, the Servicemembers Civil Relief Act, 50 U.S.C. 3952, requires a court order before the property can be repossessed for a pre-service breach.

If You Are Being Garnished or Sued in Colorado

Work the problem in this order:

1. Answer the lawsuit. A default judgment is how most Colorado garnishments start. Filing an answer, even one that simply disputes the amount owed, forces the creditor to prove its case and often opens the door to a payment arrangement.
2. If you get a repossession notice, use your cure window. For a payment-only default on a consumer credit transaction, you generally have 20 days after notice to catch up and stop the repossession entirely.
3. Check the garnishment math. Compare what is being withheld against the 20%/40-times-minimum-wage formula. If your employer is taking more, ask the court to correct the writ.
4. File a hardship objection if you need it. Colorado has no automatic head-of-household exemption, but you can ask the court to protect more of your income for actual living expenses.
5. Ask whether the debt is time-barred, carefully. Colorado's 3-year and 6-year buckets both apply depending on the type of claim, and many debts collectors treat as ordinary end up in the longer 6-year category. Raise the statute of limitations as a defense in your answer; the court will not raise it for you.
6. Consider bankruptcy if the debt is unmanageable. Filing triggers an automatic stay that stops garnishment immediately, and Colorado's exemptions apply inside bankruptcy too.

Information last verified on 2026-08-12. This article has not yet been reviewed by a licensed lawyer.

Related Resources

• Debt Collection Laws by State
• How to Stop Wage Garnishment
• Statute of Limitations on Debt
• Can Social Security Be Garnished?
• Colorado Statute of Limitations
• Colorado Bankruptcy Laws

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Last updated: 2026-08-12.

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