Colorado § 5-19-202 - Definitions.

§ 5-19-202. Definitions.

As used in this part 2, unless the context otherwise requires:

(1) "Administrator" means the assistant attorney general designated by the attorney general pursuant to section 5-6-103.

(2) "Affiliate":

(A) With respect to an individual, means:

(i) The spouse of the individual;

(ii) A sibling of the individual or the spouse of a sibling;

(iii) An individual or the spouse of an individual who is a lineal ancestor or lineal descendant of the individual or the individual's spouse;

(iv) An aunt, uncle, great aunt, great uncle, first cousin, niece, nephew, grandniece, or grandnephew, whether related by the whole or the half blood or adoption, or the spouse of any of them; or

(v) Any other individual occupying the residence of the individual; and

(B) With respect to an entity, means:

(i) A person that directly or indirectly controls, is controlled by, or is under common control with, the entity;

(ii) An officer of, or an individual performing similar functions with respect to, the entity;

(iii) A director of, or an individual performing similar functions with respect to, the entity;

(iv) A person that receives or received more than twenty-five thousand dollars from the entity in either the current year or the preceding year or a person that owns more than ten percent of, or an individual who is employed by or is a director of, a person that receives or received more than twenty-five thousand dollars from the entity in either the current year or the preceding year;

(v) An officer or director of, or an individual performing similar functions with respect to, a person described in subsection (2)(B)(i) of this section;

(vi) The spouse of, or an individual occupying the residence of, an individual described in subsections (2)(B)(i) to (2)(B)(v) of this section; or

(vii) An individual who has the relationship specified in subsection (2)(A)(iv) of this section to an individual or the spouse of an individual described in subsections (2)(B)(i) to (2)(B)(v) of this section.

(3) "Agreement" means an agreement between a provider and an individual for the performance of debt-management services.

(4) "Bank" means a financial institution, including a commercial bank, savings bank, savings and loan association, credit union, mortgage bank, and trust company, engaged in the business of banking, chartered under federal or state law, and regulated by a federal or state banking regulatory authority.

(5) "Business address" means the physical location of a business, including the name and number of a street.

(6) "Concessions" means assent to repayment of a debt on terms more favorable to an individual than the terms of the contract between the individual and a creditor.

(7) "Day" means calendar day.

(8) (A) "Debt-management services" means services as an intermediary between an individual and one or more creditors of the individual for the purpose of obtaining concessions, but does not include:

(i) Legal services provided in an attorney-client relationship by an attorney licensed to practice law in this state;

(ii) Accounting services provided in an accountant-client relationship by a certified public accountant certified or authorized by the state board of accountancy to provide accounting services in this state; or

(iii) Representative services provided before the internal revenue service, the department of revenue, or the department of labor and employment in an enrolled agent-client relationship for tax purposes by an enrolled agent who is authorized by and in good standing with the United States department of treasury, if the enrolled agent is not engaging in other debt management services.

(B) The exemptions in subsection (8)(A) of this section do not apply to any person who directly or indirectly provides any debt management services on behalf of a licensed attorney, certified public accountant, or enrolled agent if that person is not an employee of the licensed attorney, certified public accountant, or enrolled agent.

(9) "Entity" means a person other than an individual.

(10) "Good faith" means honesty in fact and the observance of reasonable standards of fair dealing.

(11) "Individual" means a natural person.

(12) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, or any other legal or commercial entity. The term does not include a public corporation, government, or governmental subdivision, agency, or instrumentality.

(13) "Plan" means a program or strategy in which a provider furnishes debt-management services to an individual and that includes a schedule of payments to be made by or on behalf of the individual and used to pay debts owed by the individual.

(14) "Principal amount of the debt" means the amount of a debt at the time of an agreement.

(15) "Provider" means a person that provides, offers to provide, or agrees to provide debt-management services directly or through others.

(16) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(17) "Settlement fee" means a charge imposed on or paid by an individual in connection with a creditor's assent to accept in full satisfaction of a debt an amount less than the principal amount of the debt.

(18) "Sign" means, with present intent to authenticate or adopt a record:

(A) To execute or adopt a tangible symbol; or

(B) To attach to or logically associate with the record an electronic sound, symbol, or process.

(19) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(20) (A) "Trust account" means an account held by a provider that is:

(i) Established in an insured bank;

(ii) Separate from other accounts of the provider or its designee;

(iii) Designated as a trust account or other account designated to indicate that the money in the account is not the money of the provider; and

(iv) Used to hold money of one or more individuals for disbursement to creditors of the individuals.

(B) For a plan under which creditors will settle debts for less than the principal amount of the debt, nothing in this part 2 prohibits a provider from requesting or requiring an individual to place funds in an account, separate from the individual's then-existing bank account, to be used for the provider's fees and for payments to creditors or debt collectors in connection with the debt management services, if:

(i) The funds are held in an account at an insured financial institution;

(ii) The individual owns the funds held in the account and is paid accrued interest on the account, if any;

(iii) The entity administering the account is not owned, controlled by, or in any way affiliated with the provider;

(iv) The entity administering the account does not give or accept any money or other compensation in exchange for referrals of business involving the debt management provider or plan; and

(v) The individual may withdraw from the debt management plan at any time without penalty, and immediately receives all funds in the account, other than fees earned in compliance with section 5-19-223, as required by section 5-19-226.

Source: L. 2017: Entire article added with relocations, (HB 17-1238), ch. 260, p. 1137, § 4, effective August 9.

Editor's note: This section is similar to former § 12-14.5-202 as it existed prior to 2017.

ANNOTATION

Annotator's note. Since § 5-19-202 is similar to former § 12-14.5-202, relevant cases construing that provision have been included in the annotations to this section.

The Uniform Debt-Management Services Act does not violate the separation of powers doctrine of the Colorado constitution by regulating attorneys. Limited regulation of attorneys under the Act does not implicate the Colorado supreme court's regulatory authority over bar admission, discipline, or license revocation of attorneys. Coffman v. Williamson, 2015 CO 35, 348 P.3d 929.

The Act does not violate the commerce clause or the privileges and immunities clause of the United States constitution with respect to regulating out-of-state attorneys because the Act is facially neutral and any burden on out-of-state attorneys is incidental. Out-of-state attorneys can still conduct debt-management services in Colorado, provided they comply with the Act or fall within the legal services exemption by associating with a local attorney and satisfying pro hac vice requirements to appear before a court. Coffman v. Williamson, 2015 CO 35, 348 P.3d 929.

The Act's exemptions from regulation should be applied narrowly because the Act was enacted to protect consumers and is remedial in nature. For a nonlawyer assistant to be covered under the legal services exemption to regulation under the Act, a person must at a minimum work for an attorney and under the attorney's supervision. Coffman v. Williamson, 2015 CO 35, 348 P.3d 929.

The legal services exemption only extends to a nonlawyer assistant if the nonlawyer assistant works for the attorney providing debt-management services. A nationwide legal software company owned and operated by nonlawyers that contracted with lawyers to provide debt-management services did not fall within the legal services exemption because the legal software company did not act on behalf of the lawyers in the provision of debt-management services; rather, the lawyers acted on behalf of the legal software company. Coffman v. Williamson, 2015 CO 35, 348 P.3d 929.

The legal services exception in subsection (10)(A)(i) does not implicate subject matter jurisdiction, and, therefore, can be waived if not timely asserted as an affirmative defense. State ex rel. Suthers v. Johnson Law Group, 2014 COA 150, 350 P.3d 961.