Colorado § 5-2-203 - Delinquency charges.

§ 5-2-203. Delinquency charges.

(1) With respect to a consumer credit transaction, the parties may contract for a delinquency charge on any installment or minimum payment not paid in full within ten days after its scheduled due date in an amount not exceeding:

(a) Fifteen dollars for a transaction not secured by an interest in land; except that, if the transaction is precomputed, the amount may not exceed the greater of fifteen dollars or the deferral charge described in section 5-2-204 (1) that would be permitted to defer the unpaid amount of the installment for the period that it is delinquent; or

(b) Five percent of the unpaid amount of the installment or minimum payment due for a transaction secured by an interest in land.

(2) A delinquency charge under this section may be collected only once on an installment or minimum payment however long it remains in default. No delinquency charge may be collected if the installment or minimum payment has been deferred and a deferral charge described in section 5-2-204 has been paid or incurred until ten days after the deferred due date. A delinquency charge may be collected at the time it accrues or at any time thereafter.

(3) No delinquency charge may be collected on an installment or minimum payment that is paid in full within ten days after its scheduled installment due date even though an earlier maturing installment, minimum payment, or a delinquency charge on an earlier installment or minimum payment may not have been paid in full. For purposes of this subsection (3), payments are applied first to current installments or minimum payments due and then to delinquent installments or minimum payments due.

(4) (a) A creditor who has imposed a delinquency charge shall notify the consumer in writing of the amount of the delinquency charge assessed as follows:

(I) Before the due date of the next scheduled payment;

(II) If the creditor provides the consumer with periodic statements for each installment, on or with the next periodic statement provided to the consumer after the delinquency charge has been assessed; or

(III) For a revolving credit account for which a credit card is issued and that is not secured by an interest in land, before, on, or with the next periodic statement after the delinquency charge has been assessed.

(b) A creditor shall not assess a delinquency charge unless the delinquency charge is assessed within thirty days after the scheduled due date of any installment not paid in full or, for a revolving credit account for which a credit card is issued and that is not secured by an interest in land, within ninety days after the scheduled due date of the delinquent minimum payment.

(5) No finance charge may be assessed on any delinquency charge. For purposes of this section, for revolving credit, an installment is the minimum payment that the debtor is required to make during any billing cycle excluding any past-due amount from any previous billing cycle.

(6) If two installments or parts thereof of a precomputed transaction are in default for ten days or more, the creditor may elect to convert the transaction from a precomputed transaction to one in which the finance charge is based on unpaid balances, and the terms of the converted transaction shall be no less favorable to the consumer than the terms of the original transaction. In this event the creditor shall make a rebate pursuant to the provisions on rebate upon prepayment contained in section 5-2-211 as of the maturity date of the first delinquent installment and thereafter may make a finance charge as authorized by the provisions on finance charges. The amount of the rebate shall not be reduced by the amount of any permitted minimum charge described in section 5-2-201. If the creditor proceeds under this subsection (6), any delinquency or deferral charges made with respect to installments due at or after the maturity date of the first delinquent installment shall be rebated and no further delinquency or deferral charges shall be made.

Source: L. 2000: Entire article R&RE, p. 1198, § 1, effective July 1. L. 2007: (4) amended, p. 842, § 1, effective May 14.

Editor's note: This section is similar to former § 5-2-203, as it existed prior to 2000.

ANNOTATION

Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 preempted plaintiff's claims against a Delaware bank that the bank's late charges violated this section and § 5-5-202. Stoorman v. Greenwood Trust Co., 888 P.2d 289 (Colo. App. 1994) (decided under law in effect prior to the 2000 repeal and reenactment).

"Interest" under § 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 includes late fees and, therefore, Colorado law is preempted by the federal law with respect to late charges. Stoorman v. Greenwood Trust Co., 888 P.2d 289 (Colo. App. 1994); Richardson v. Citibank (S.D.), N.A., 908 P.2d 532 (Colo. 1995); Smiley v. Citibank (S.D.), 517 U.S. 735 (1996) (decided under law in effect prior to the 2000 repeal and reenactment).

Plaintiff's common law challenges were preempted by § 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 since that law creates an exclusive federal remedy and an exclusive federal remedy is inconsistent with the idea that a plaintiff can seek relief under state common law theories. Stoorman v. Greenwood Trust Co., 888 P.2d 289 (Colo. App. 1994) (decided under law in effect prior to the 2000 repeal and reenactment).

National Bank Act preempts this section to the extent that an out-of-state national bank may "export" a favorable interest rate from the state in which it is located. Copeland v. MBNA Am., N.A., 883 P.2d 564 (Colo. App. 1994) (decided under law in effect prior to the 2000 repeal and reenactment).

Section 86 of the National Bank Act of 1982 authorizes a national bank to charge interest at the rate allowed by the laws of the state where the bank is located. Copeland v. MBNA Am. Bank, N.A., 907 P.2d 87 (Colo. 1995) (decided under law in effect prior to 1993 amendment).

"Interest" under § 85 of the National Bank Act of 1982, includes late payment fees and, therefore, a national bank located in Delaware is authorized to charge such fees to a Colorado cardmember despite the fact that Colorado law prohibits late payment fees in addition to finance charges. Copeland v. MBNA Am. Bank, N.A., 907 P.2d 87 (Colo. 1995) (decided under law in effect prior to 1993 amendment).