Medical debt continues to challenge collection agencies nationwide. 12% of U.S. adults borrowed money to pay medical bills. In total, Americans took on $74 billion in healthcare-related debt over a single year. As balances grow, Colorado has responded with stricter laws to protect patients and ensure fair collection practices.
For agencies, these regulations mean more than just compliance checklists. They reshape outreach, documentation, and recovery strategies. This guide explains Colorado’s medical debt collection laws and how to avoid a penalty in 2025.
Quick glance:
Colorado’s tightening of medical debt laws stems from the growing crisis of unpaid healthcare bills that have long burdened residents. 11% of Coloradans had medical debt in collections, placing the state among those most affected by medical-related financial stress.
Lawmakers responded with two key pieces of legislation designed to promote transparency, fairness, and accountability in the medical debt collection process.
Introduced in the Colorado Senate and enacted in May 2023, SB23-093 focuses on improving billing transparency and curbing predatory collection practices. It applies to healthcare providers, collection agencies, and debt buyers.
Key provisions include:
Introduced in the Colorado House and enacted in August 2023, HB23-1126 targets how medical debt is reported to credit bureaus. Its goal is to prevent credit harm from debts that may be inaccurate, disputed, or recently incurred.
Key provisions include:
Together, these laws redefine what compliance means for collection agencies in Colorado. They emphasize transparency, accurate reporting, and ethical recovery practices.
These are standards that agencies must now uphold to avoid costly violations. But how do these new laws translate into day-to-day compliance for debt collection agencies? The next section explores exactly that.
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The new Colorado medical debt laws redefine consumer protections. Compliance now goes beyond courteous communication or timely disclosures. It requires proactive alignment of your billing, reporting, and record-keeping practices with all legal expectations set out in SB23-093 and HB23-1126.
Below are the core compliance areas you must address to remain fully aligned with the state’s framework.
Under SB23-093, you cannot charge more than 3% annual interest on any medical debt. This rule aims to prevent inflated repayment burdens on consumers.
Your responsibilities to remain compliant include:
Before you initiate any collection activity, you must provide consumers with a detailed, itemized statement that lists every charge and adjustment. This ensures full transparency and reduces disputes.
You can begin by:
Collection activity is prohibited while an insurance or billing appeal is pending. Acting prematurely could lead to legal penalties and consumer complaints.
Collection agencies need to:
Under Colorado law, you may not report medical debt to credit bureaus at all. House Bill 23-1126 prohibits consumer reporting agencies from including medical debt information in consumer credit reports, except in very limited cases involving high-value credit transactions.
To remain compliant, you should:
Transparency is central to compliance. You must notify consumers of their rights and provide clear information about the status of their debt.
Your responsibilities include:
Both SB23-093 and HB23-1126 assume that you can prove compliance through proper documentation. Failure to maintain records could be treated as noncompliance.
Do not miss out on:
Modern compliance demands more than manual oversight—and this is where Tratta optimizes your process. Its automated compliance workflows track state-specific regulations, such as Colorado’s interest caps and credit-reporting delays, and alert your team before any action risks noncompliance.
With centralized audit logs and real-time rule updates, Tratta helps your agency stay compliant while focusing on recovery performance. Learn more by scheduling a demo today.
Colorado’s legislative updates are part of a broader movement reshaping how medical debt is managed across the United States. To understand where this trend is heading next, the following section explores broader national coverage of medical debt statutes.
Suggested Read: Understanding Medical Debt Collection and FDCPA Regulations
When the three major credit reporting agencies—Equifax, Experian, and TransUnion—announced in 2023 that they would stop reporting paid medical collection debt and remove debts under $500, it was seen as a major step toward consumer fairness.
But things have changed since then. The national framework for medical debt reporting has continued to change, and as a collection agency, you must take stock of the following developments shaping your compliance strategy in 2025:
These laws have made it necessary for debt collection agencies to be more cautious than ever—because the risks of getting it wrong can be severe. The next section explores the operational risks and penalties for creditors.
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Violations of SB23-093 or HB23-1126 can trigger administrative action, civil liability, and severe reputational damage. As a collection agency, even unintentional errors, such as reporting too early, applying the wrong interest rate, or failing to provide itemized documentation, can lead to fines or litigation.
This is a breakdown of what is at stake under the state’s enforcement framework.
Colorado’s enforcement climate leaves little room for procedural lapses. To avoid costly penalties and maintain trust, agencies must move from reactive compliance to proactive governance. The next section outlines best practices to help you stay legally aligned.
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Colorado’s medical debt laws require agencies to reexamine how they collect, communicate, and document every transaction. By embedding compliance into your daily operations, you can reduce risk exposure and maintain the trust of both regulators and clients.
These are a few tips that can ensure you remain within the legal boundaries:
Tratta offers a Compliance-by-Code architecture where every workflow is built to uphold regulatory integrity from the ground up. The platform maintains audit-ready records and configurable compliance policies that align with laws like Colorado’s SB23-093 and HB23-1126. Contact us to understand how these standards can be directly integrated into your collection operations.
Patients are not traditional debtors. They require a sensitive approach that addresses their medical, emotional, and often financial challenges.
Building patient-centric strategies not only aligns with HIPAA regulations but also enhances trust, improves recovery rates, and strengthens your agency’s professional credibility. These are a few proven ways:
To make these principles actionable, the next section explores how Tratta automates risk controls and embeds compliance directly into medical debt workflows.
If your agency manages medical debt portfolios, compliance cannot be an afterthought. Tratta offers a modern, all-in-one debt collection platform that automates risk controls and enforces laws like Colorado’s SB23-093 and HB23-1126.
These features can help you stay compliant while maintaining debtor trust:
This feature allows patients to access and resolve their accounts directly through a secure, branded portal. They can review itemized statements, set up payment plans, and make payments online without involving an agent. By capturing every action automatically, the portal supports documentation for audits and ensures you meet medical debt communication requirements.
Tratta’s IVR system supports multiple languages, allowing you to serve diverse patient populations while maintaining compliance with state disclosure rules. Patients can make payments securely over the phone and receive information in a language they understand. Every interaction is recorded for transparency and HIPAA compliance.
With voice, SMS, email, and portal messages managed from one dashboard, Tratta keeps your outreach consistent and compliant. You can send legally approved messages and maintain a record of all communications for audit purposes. This reduces the risk of unwanted contact, consumer complaints, and regulatory violations.
Campaigns allow you to segment portfolios and automate state-specific workflows. You can customize triggers, send compliance-aligned notices, and adjust workflows as laws evolve. This ensures every medical debt account follows the correct process from first contact to closure.
Tratta’s integrated payment solution simplifies secure payment processing while maintaining compliance with interest rate limits and refund requirements. You can accept multiple payment types and track every transaction in real time. Built-in fraud prevention and detailed audit logs protect both consumers and your agency.
The platform’s reporting tools give you real-time insight into operational performance, compliance metrics, and patient engagement. You can monitor dispute rates, payment timelines, and credit-reporting timelines across all accounts. These insights help identify risks early and keep your agency compliant with state and federal standards.
Tratta allows you to tailor workflows, disclosures, and templates to your agency’s specific medical debt processes. You can embed state rules, such as Colorado’s 3% interest cap, directly into your system logic. This flexibility ensures compliance without disrupting your existing operations.
Tratta integrates seamlessly with CRMs, billing systems, and healthcare provider databases to maintain data accuracy and compliance. You can validate insurance status or itemized statements before initiating collections, reducing dispute risk. All data transfers remain encrypted and fully HIPAA-compliant.
Tratta’s architecture is built for regulatory integrity, backed by SOC 2 Type II and PCI DSS Level 1 certifications. It enforces compliance through embedded rules and maintains detailed audit-ready records for seven years. These safeguards ensure your agency operates securely and remains aligned with changing debt collection regulations.
Tratta helps agencies stay ahead by automating jurisdictional rules, enforcing disclosure timing, and suppressing non-compliant accounts before they reach credit bureaus.
Collection agencies must prepare for a shifting compliance framework. State-level laws like Colorado’s continue to change, and federal actions—such as attempts to ban medical debt from credit reports—may resurface. You need to stay agile and informed. Investing now in robust compliance frameworks will help you stay ahead and turn regulatory change into a strategic advantage.
With Tratta, you gain a partner that updates its platform in real time to reflect legislative amendments, state-specific rules, and changing consumer protections. Our flexible subscription plans let you select the level of automation, oversight, and audit support that fits your agency’s size and complexity.
Explore our compliance solution today. Schedule a demo to see how you can simplify medical-debt collections while mitigating risk.
Colorado’s laws add specific consumer protections beyond the FDCPA, such as a 3% annual interest cap, stricter credit reporting timelines, and mandatory itemized statements before collection begins. These rules are designed to address the state’s medical debt crisis more directly than federal standards.
No. Under both state and federal laws, contacting a consumer’s employer about medical debt is generally prohibited except for verifying employment or insurance details. Agencies must ensure all communications comply with privacy and disclosure requirements.
When the patient is a minor, the debt typically becomes the responsibility of the parent or guardian who signed the treatment agreement. Agencies must verify account ownership carefully to avoid collecting from the wrong party or violating HIPAA.
Agencies must retain detailed records of communications, itemized statements, interest calculations, and credit reporting timelines. Maintaining audit-ready documentation is essential for demonstrating compliance during state or federal reviews.
