Colorado Debt Settlement Reminders

IAPDA Team • 18 Jan, 2023

Colorado Debt Settlement Reminders
By: Robby H. Birnbaum, Esq.

As you ramp things up for a successful 2023, I want to drop a reminder note regarding Colorado and debt settlement. Colorado requires Debt Settlement companies to be licensed, and strictly enforces the ‘prohibitions section’ in the state statute. The administration of licensing and enforcement is run through the Colorado Attorney General’s office. There is no cap on fees for a state-licensed debt settlement provider that also complies with the FTC’s TSR.

Below is a summary of what the Colorado regulator looks for as it reviews its licensees. This is not a complete list of every Colorado requirement and prohibition, but rather a useful summary of what to keep an eye out for. I italicized a few of the items below that have been of more concern recently. 

Colorado Debt Settlement - Company Prohibitions List  


  1. Settling a debt on behalf of a client without that client first agreeing to the terms of the settlement;
  2. Executing a Power of Attorney on behalf of a client once that client has terminated their agreement with the company;
  3. Transfer, or cause to be transferred, money from a clients dedicated savings account, unless the transfer is a) a return of money to that individual, b) for the payment of creditors pursuant to a properly authorized agreement, or c) payment of services fee pursuant to a properly authorized agreement;
  4. Offer any incentive or reward to a client for entering into an agreement for debt management services;
  5. Providing any bonus or compensation for referring someone to a debt settlement program;
  6. Providing compensation to employees based on the number of customer’s the employee enrolls into the program;
  7. Create a debt settlement plan that would result in an increase to the total amount owed by the consumer to creditors; 
  8. Settle or make a consumer believe that payment is for full settlement of a debts without obtaining certification by the creditor verifying payment is in full settlement of the debt;
  9. Make any statements to the consumer that the company will pay any bills or prevent attachments.
  10. Make any statements to consumers that a certain amount saved or paid by the consumer will result in an amount or range of debts being satisfied;
  11. Misrepresent to the consumers that the company can provides any legal advice or services;
  12. Misrepresent that it is a non-for-profit or tax exempt;
  13. Accepting a confession of judgement or power of attorney against an individual;
  14. Cannot use any unfair or deceptive acts or practices in selling marketing their services, including omission of anything that a consumer would consider ‘material’ with regards to the services;
  15. Advise consumers not to make any payments to creditors;
  16. Purchasing a debt or obligation of an individual;
  17. Accepting any documents noting some type of monetary promise from an individual, such a future dated check;
  18. Lend money or provide credit to individuals;
  19. Disclose non-public personal information of customers and creditors, except as required by law, or to creditors and other as necessary to administer the plan;
  20. Charge the consumer for ancillary products;
  21. Provide legal services unless they are licensed to practice law;
  22. Receive any incentive or reward for assisting a consumer in obtaining credit from third parties.
  23. Please be mindful of the above. Lately, Colorado has been looking at companies that do not obtain complete signatures on consumer agreements and those that pay sales commissions to company staff based on enrollments. 

For more information, please contact me directly at (954) 343-6959 or

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