The Colorado Uniform Debt Management Services Act (DMSA) regulates companies that offer and provide debt management services to Colorado residents. Under Colorado law, debt management services providers include providers of non-profit and for-profit credit counseling and debt settlement services. Additionally, the DMSA applies to law firms and attorneys who offer and provide debt management services, unless they meet the state’s listed statutory exemption.
In May 2024, the DMSA was amended to revise the statutory prerequisites for providing debt-management services, as well as statutory the requirements for communication by electronic or other means, and the statutory fees providers may charge in the State of Colorado.1 While both amendments to the statutory prerequisites for providing debt-management services and the requirements for communication by electronic or other means became effective on August 7, 2024, the amendments to the statutory fees sections, as stated further below, take effect on March 1, 2025.
Under the newly passed amendments, providers are now required to prepare a “plan” for consumers detailing the schedule of payments to be made by or on behalf of the consumer and used to pay the consumer’s debts before furnishing or contracting for debt management services with the said consumer.2 The amendments also revised the list of creditors that providers are required to generate for consumers as a prerequisite for providing debt management services.3 The section on communication by electronic means was amended to clarify that if a provider utilizes the internet or other electronic means to meet specific compliance requirements, including disclosures, reporting requirements, and record-keeping requirements, the provider must obtain a consumer's consent at the time of satisfying the requirements.4
Most importantly, however, the amendments repealed the statutory provisions outlining the fees that a debt management services provider may charge and now requires the Administrator of the DMSA to adopt rules specifying the nature and amount of permitted fees, effective March 1, 2025. Pursuant to the new amendments, such fee rules to be adopted by the administrator “must not unduly limit consumer access to debt management services programs based on available state and national data.”5
As of November 8, 2024, the Administrator has released two versions of a draft rule regarding fees – one version that would be identical to the current language of the DMSA, and a second version that would require fees to be based on the amount saved by the consumer as the result of the provider’s renegotiation, settlement, reduction, or alteration of a debt enrolled in the provider’s service.
We will continue to monitor the status of this rulemaking and update you on its adoption.
1https://leg.colorado.gov/sites/default/files/2024a_1380_signed.pdf
2Colo. Rev. Stat. §§ 5-19-219, 202(13).
3See id. at § 5-19-217.
4See id. at § 5-19-218.
5Id. at § 5-19-223.
