Colorado Issues Guidance on Fees for Debt Cancellation and Suspension Agreements

On August 7, 2017, the Colorado Uniform Consumer Credit Code (UCCC) Administrator issued an Administrator Opinion stating that the UCCC does not authorize additional charges for debt cancellation and suspension agreements to be excluded from the “finance charge,” and thus these charges contribute to the determination of whether a lender has surpassed the finance charge cap set by the UCCC.

Affected organizations will be permitted 120 days from August 7, 2017 to comply with this opinion.

Colorado law defines the “finance charge” as “the sum of all charges payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or as a condition of the extension of credit.”  The UCCC sets caps on the finance charge that a lender can contract for and receive.  These caps will vary depending on the type of loan at issue.

The opinion clarifies that even if debt cancellation and suspension agreements are otherwise permitted by federal or state law or regulation, the UCCC does not authorize the charges resulting from these agreements to be excluded from the finance charge.

The guidance finishes by rescinding a November 9, 2004 Administrator’s Advisory Opinion that granted permission to Colorado-chartered depositary institutions to impose a charge for debt cancellation and suspension agreements and exclude the charge from the finance charge and corresponding annual percentage rate.

The full text of the opinion may be found here.