FAQ About Consumer and Commercial Debt Actions:

1. What is involved and how much does it cost?

First, the appropriate Court for the action must be determined and the proper County (venue) for the action must be identified. Colorado has two levels of Courts, County Court (amount in controversy is less than $15,000.00) and District Court ( amount in controversy exceeds $15,000.00) The important distinction in this choice is that County Courts use an expedited and simplified process whereby your case can go to trial in 2-4 months at a much lower investment of attorney time, thus lower cost; as opposed to the District Courts which will involve a more expansive, complicated and time consuming process. District Court cases can go to trial in 6-12 months after filing, depending on the jurisdiction involved and the amount of preliminary discovery work that is conducted, i.e. depositions, production and review of documents and expert witnesses.

As an example, for an action upon a defaulted promissory note, which is contested:

County Court: a reasonable estimation of time to file the action and complete a trial in the matter could be 6 to 10 attorney hours, plus court costs.

District Court: a reasonable estimation of time to file the action and complete a trial in the matter could easily be a minimum of 20-30 attorney hours, plus court costs.

2. How long do I have to sue on an unpaid item?

The Statute of Limitations in Colorado for most accounts is 6 years as long as a written document is involved in the creation of the debt. A 3 year Statute of Limitation would apply to a debt which is solely based upon oral statements. This period would begin upon the date of the default. It would be restarted upon receipt of any payment on the debt which would act as a new act of reaffirmation.

3. What documents do I need to sue on a debt?

You will need to be able to produce the original document which created the debt, such as a credit account application or a promissory note, and also be able to provide proof that the funds, services or product were received by the debtor, such as cancelled checks, invoices and delivery receipts. If the debtor is or has questioned the quality of the goods you need to be able to document the manner in which you responded to or handled the issues. It will also be necessary to be able to demonstrate the payment history upon the account, should questions arise whether a payment was received or properly applied to the account.

4. What is the process of filing suit?

First a Summons and Complaint must be prepared which identifies the nature of the claim and then these documents must be served on the debtor and filed with the Court. The debtor then must respond with an Answer to the Complaint. The Debtor may also raise claims he has against you in the form of a Counterclaim. After conducting any appropriate discovery, and after a mediation process, if applicable, the matter goes to trial before the Court. Should the debtor fail to respond and file an answer, the Court, upon request of the creditor, will grant a default judgment.

5. How do I collect upon a Judgment?

Once the judgment is entered the Judgment Creditor has available the following procedures to secure or collect upon the judgment:

1) Garnishment and Levy upon the Debtor's bank account.
2) Garnishment of wages or compensation due the Debtor.
3) Recording a Judgment Transcript against real property owned by the Debtor, which can then be foreclosed upon and then sold by the Sheriff.
4) Writ of Execution and Levy to seize personal property which can then be sold by the Sheriff.
5) Service Interrogatories upon the Debtor to disclose information and answer questions regarding his assets.
6) Obtain a Court Order to have debtors of the Judgment Debtor pay such debts to the Judgment Creditor.

Each of these procedures entails additional costs which usually are recoverable. Attorney fees incurred with respect to these procedures are not recoverable without obtaining a new Order of the Court adding them to the judgment.

6. How long will a judgment last?

A County Court judgment lasts for 6 years and be revived or extended, provided the proper notification procedures are completed within the six year limit.

A District Court judgment lasts for 20 years and be revived or extended, provided the proper notification procedures are completed within the twenty year limit.

7. What are Court Costs? Are they recoverable?

Court costs are the fees paid to the Court to initiate the lawsuit and to file subsequent documents. Currently the County Court filing fee of $97.00 includes the cost of all filings with the Court. The District Court Civil case filing fee is currently $224.00 and each subsequent document filed with the Court will incur an additional fee of $6.00 to comply with the electronic filing requirements.

8. What other costs are involved? Are they recoverable?

Other Court costs are costs reasonably and necessarily incurred with respect to the prosecution of the matter to judgment or conclusion. Costs, as are approved by the Court after a submitting of a "Bill of Costs", are awarded to the prevailing party and chargeable to the losing party, in addition to the judgment entered. The normal types of expenses which are included as recoverable costs are service of process fees, recording fees, deposition fees, expert witness fees and transcript fees. Certified mailing costs, postage, mileage fees, xerox or copying fees or other smaller items may or may not be approved by the Court. The value of your time, spent as a party, is not a recoverable cost.

Post judgment costs incurred with respect to recovery are added to the judgment and are recoverable. These costs would include the Court fees for issuance of a Writ of Garnishment, setting Rule 69 proceedings, costs of service of documents, recording fees etc. Upon the motion of the Judgment Debtor the Court has the ability to review any fees claimed to determine if they are appropriate and reasonable.

9. Can I recover the attorney fees I spend in collection upon this debt?

In Colorado, attorney fees are recoverable in two circumstances: 1) if authorized by statute; or, 2) if a written agreement exists whereby the party sought to be charged for such fees has previously agreed to pay such attorney fees if found to be the losing party in the litigation.

The attorney fees sought to be included in the judgment entered by the Court will be reviewed by the Court to determine their reasonableness. If found by the Court to be reasonable, such attorney fees will be added to the judgment amount.

If a contingency fee is involved, the Court will likely review the attorney fees sought for reasonableness as to total amount, as calculated under the Contingency Fee Agreement, and compare them to the amount of fees which could have been expected to be incurred under an hourly billing arrangement.