Colorado Medical Debt Collection: 3% Cap, 30-Day Notice, 6-Year Limit

Colorado medical debt collection laws give patients some of the strongest protections in the country. Interest on medical debt is capped at 3% per year, a medical creditor cannot foreclose on your primary residence to collect a bill, and before any lien, bank seizure, or wage garnishment, the creditor owes you at least 30 days’ written notice. On top of that, Colorado’s wage garnishment formula shields roughly three times more income than the federal minimum, and you have six years before a collector loses the right to sue you at all. Federal rules under the Fair Debt Collection Practices Act sit underneath all of this and set the floor for how collectors can contact you and what they must prove.

What Collectors Cannot Do to Your Home or Paycheck

The single most important protection: a medical creditor cannot foreclose on your primary residence or homestead, including a mobile home, to collect a medical debt.¹ A court judgment does not change this. The creditor can record a lien that sits on the property and eventually gets paid when you sell or refinance, but nobody can force you out of your home over a medical bill. Judgment liens also fall behind existing mortgages and earlier liens in priority, so they only get satisfied after higher-priority claims.

Wages are protected too, and this is where Colorado law diverges sharply from the federal baseline. Under Colorado’s garnishment formula, the amount exempt from garnishment each pay period is the greater of a fixed floor tied to minimum wage or 80% of your disposable earnings, whichever protects more of your paycheck.² For weekly pay, the floor is 40 times the applicable minimum wage. With Colorado’s 2026 minimum wage at $15.16 per hour, that works out to roughly $606 per week that a creditor cannot touch. The federal formula, by comparison, only protects earnings up to 30 times the federal minimum wage of $7.25, or $217.50 per week.

Some income is completely off-limits regardless of any judgment. Social Security cannot be garnished for private debts like medical bills.³ Disability payments and workers’ compensation are similarly protected. And your employer cannot fire you because your wages are being garnished for a single debt.⁴ If you can show hardship, you can petition the court to reduce the garnishment amount.

The 30-Day Notice Before Aggressive Collection

Colorado splits aggressive collection tactics into two categories. Foreclosure of a primary home is impermissible, full stop. The tactics that are permissible with a court judgment (recording a lien on real property, seizing bank accounts or personal property, garnishing wages) all share one condition: a medical creditor collecting on hospital services must give you at least 30 days’ written notice before taking any of them.⁵

That 30-day window is your opening to set up a payment plan, apply for hospital financial assistance, or dispute the bill before anything escalates. Pending legislation (HB26-1267) would go further and require creditors to verify you were screened for public health insurance and discounted care before collecting or selling a medical debt, with damages of $3,000 or actual damages, whichever is greater, for violations.⁶ That bill is not law yet.

The 3% Interest Cap

Colorado caps interest on medical debt at 3% per year.⁷ It applies regardless of what the provider’s original agreement says. Before the cap, some providers and collectors added rates that turned a manageable bill into something much worse. If a collector is charging more than 3% annually on a medical balance, that charge likely violates Colorado law.

How Collectors Must Communicate With You

Debt collectors in Colorado must follow both the Colorado Fair Debt Collection Practices Act and the federal FDCPA. Calls before 8 a.m. or after 9 p.m. local time are off-limits unless you’ve agreed to them, and collectors cannot contact you at work if they know your employer doesn’t allow it.⁸ Every contact must identify the caller and state that the call concerns collecting a debt. Collectors cannot discuss your debt with anyone other than you, your attorney, or a consumer reporting agency.

Under the CFDCPA, collectors cannot misrepresent the amount or legal status of a debt, threaten actions they don’t intend to take, imply that nonpayment will lead to arrest, or pretend to be affiliated with a government agency.⁹

You can stop the calls in writing. Once you send a cease-communication request, the collector can only contact you to confirm receipt or to notify you of a specific legal step, such as filing a lawsuit.⁸ If you have an attorney, all communication has to go through your lawyer.

Making the Collector Prove the Debt

Before you pay a cent, demand proof the debt is real, the amount is correct, and this collector has the authority to collect it. Federal law requires a validation notice with the first communication or within five days of it, and that notice must include the debt amount, the creditor’s name, and a statement of your right to dispute.¹⁰ Send a written dispute within 30 days of that notice and the collector must stop all collection activity until they verify the debt.

The CFPB’s Regulation F fills in what the notice must contain. It must reference an “itemization date,” which can be the last statement date, the charge-off date, the last payment date, the original transaction date, or a judgment date. Once a collector picks one of those reference points, they must use it consistently.¹¹

When the response arrives, check it against what actually happened. Medical billing errors are common: charges for services never rendered, duplicate billing, and failure to apply insurance payments all show up regularly. Colorado gives you the right to inspect your medical records at no charge through your healthcare provider, which lets you cross-check what a collector claims against the actual record of care.¹²

Fees and Charges That Are Not Allowed

A collector cannot add charges beyond the original amount you owe unless your patient agreement with the provider explicitly allows it. Processing fees, service charges, or interest above the 3% cap violate Colorado law, and falsely representing the amount of a debt is itself a prohibited practice under the CFDCPA.⁹ Legal expenses cannot be passed to you unless a court orders it or your original agreement specifically allows it. If a demand includes unexplained line items, ask for an itemized breakdown. You are not obligated to pay charges that were not part of the original debt.

Six Years to Sue, and the Restart Trap

Medical debt in Colorado carries a six-year statute of limitations. The clock runs from the date the debt became delinquent, or from the date of the last payment, depending on the circumstances.¹³ Once six years pass without a lawsuit, the creditor loses the right to take you to court.

The debt itself does not vanish. Collectors can still call and send letters. They just cannot successfully sue. If one files after the deadline, raise the expired statute of limitations as an affirmative defense and the case typically gets dismissed.

Here is the trap that catches people. Making a partial payment or signing a written acknowledgment of an old debt can restart the six-year clock. Even a small “good faith” payment on a decade-old bill could give the creditor a fresh six years to sue. Before paying anything on an old medical debt, confirm whether the statute of limitations has already run. If it has, paying may be the worst move you can make.

Financial Assistance You May Still Qualify For

Hospital bills often come with options patients never hear about. Under federal law, every tax-exempt (nonprofit) hospital must maintain a written financial assistance policy covering all emergency and medically necessary care. The policy has to explain who qualifies, how to apply, and what discounts are available, and hospitals must post it on their websites, provide free paper copies in emergency rooms and admissions areas, and make reasonable efforts to reach community members likely to need help.¹⁴

Eligibility varies. Some hospitals offer free care to patients earning below 200% of the Federal Poverty Level and discounted care up to 400% or higher. You can apply even after a bill has gone to collections. If a hospital pursued aggressive collection without making reasonable efforts to tell you about its financial assistance program, it may be violating its obligations under federal tax law.

Two federal protections also help before a bill turns into a collection problem. If you’re uninsured or paying out of pocket, providers must give you a written good faith estimate of expected charges when you schedule or ask for one. If the final bill exceeds that estimate by $400 or more, you may be able to dispute it through a federal process.¹⁵ Separately, the No Surprises Act prohibits out-of-network providers from balance billing you for most emergency services, and your cost-sharing for out-of-network emergency care cannot exceed what you’d pay in-network.¹⁶ Ground ambulance services are not covered, so emergency transport bills can still arrive as a surprise.

One narrow situation to be aware of: Colorado’s hospital lien statute lets a hospital claim part of a personal injury settlement when it treated someone injured by another person’s negligence. That lien attaches to the settlement proceeds, not to your home or other property.¹⁷

Medical Debt on Your Credit Report

The three major credit bureaus voluntarily stopped reporting paid medical collections and medical debts under $500 in 2023. A broader federal CFPB rule that would have removed most medical debt from credit reports was struck down by a federal court in July 2025, so the voluntary bureau policies and Colorado’s own 2023 medical credit reporting law (which sunsets in July 2028) are what currently remain.

If a collector threatens to destroy your credit, check whether the debt is even reportable under the current rules. Paid medical debts and small balances under $500 should not appear. If they do, you can dispute them directly with the credit bureaus.

Verify the Collector Is Licensed

Every debt collection agency operating in Colorado must be licensed under the CFDCPA. Licensing requires detailed information about the agency’s business structure, ownership, and any history of disciplinary actions or fraud convictions among principals.¹⁸ Each agency must also post a surety bond starting at $12,000 and rising with collection volume up to $20,000, which exists to compensate consumers harmed by collector misconduct.¹⁹

If a collection agency contacts you about a medical debt, you can verify their license through the Colorado Attorney General’s office. An unlicensed collector has no legal authority to pursue you, and their actions are subject to penalties.

1
Justia. Colorado Code 6-20-201 – Definitions
2
Colorado Judicial Branch. Calculation of the Amount of Exempt Earnings Worksheet
3
Office of the Law Revision Counsel. 42 U.S. Code 407 – Assignment of Benefits
4
Office of the Law Revision Counsel. 15 U.S. Code 1674 – Restriction on Discharge from Employment by Reason of Garnishment
5
Justia. Colorado Code 6-20-203 – Limitations on Collection Actions
6
Colorado General Assembly. HB26-1267 Limitations on Collection Actions for Medical Debt
7
Colorado General Assembly. SB23-093 Increase Consumer Protections Medical Transactions
8
Office of the Law Revision Counsel. 15 U.S. Code 1692c – Communication in Connection with Debt Collection
9
FindLaw. Colorado Code 5-16-107 – False or Misleading Representations
10
Office of the Law Revision Counsel. 15 U.S. Code 1692g – Validation of Debts
11
Consumer Financial Protection Bureau. Regulation F 1006.34 – Notice for Validation of Debts
12
Justia. Colorado Code 25-1-802 – Patient Records in Custody of Individual Health-Care Providers
13
Justia. Colorado Code 13-80-103.5 – General Limitation of Actions – Six Years
14
Internal Revenue Service. Financial Assistance Policies (FAPs)
15
Centers for Medicare & Medicaid Services. No Surprises: What’s a Good Faith Estimate?
16
Centers for Medicare & Medicaid Services. No Surprises Act: Overview of Key Consumer Protections
17
Justia. Colorado Code 38-27-101 – Lien for Hospital Care – Definition
18
Justia. Colorado Code 5-16-119 – Collection Agency License – Requirements – Application – Fee – Expiration – Definition
19
Justia. Colorado Code 5-16-124 – Bond – Definition