We tend to get quite a few questions about payment plans for delinquent accounts, beginning with “Why is this owner’s payment plan only three months? I thought it had to be a six-month minimum payment plan?” to “Do we have to offer a payment plan at all?”
The answers to the above questions can be summed up with the fan-favorite phrase of “it depends.” It depends upon the specific situation, Colorado law, the association’s governing documents and policies, whether the owner has previously entered into a payment plan, and whether the file has been turned over for collections to the attorney’s office.
Here are some of our most commonly asked questions about payment plans:
- Does the association have to offer a payment plan to a delinquent owner?
- Under Colorado law, associations must offer a payment plan with a repayment period of at least six months.
- Does the association have to offer a payment plan to an owner who was previously entered into a payment plan with the association?
- Colorado law specifies that associations are not obligated to negotiate payment plans with owners who have previously entered into payment plans since the effective date of the statute (January 1, 2014). However, the association’s governing documents and policies may require otherwise.
- After the file has been turned over to the attorney, does the association have to offer a payment plan to the owner?
- No, unless the association’s governing documents require otherwise. Most likely, if the file has been turned over to the attorney, the owner either failed to request a payment plan after receiving the association’s demand letter offering such a payment plan or the owner defaulted on the payment plan with the association. However, the attorney will oftentimes recommend the association accept payment plans after turnover because payment plans allow delinquent owners to pay off their balances and money into the association’s coffers more quickly without incurring additional legal fees and costs.
- Is there a minimum length of payment plan that is required for owners who are with the attorney?
- No, there is no minimum length of payment plan required once an owner is turned over to the attorney.
- What happens to late fees and interest when an owner is in a payment plan with the attorney?
- Late fees and interest may continue to accrue on the account but should be waived if the owner successfully completes the payment plan or stipulation. This means that if an owner enters into a 12-month payment plan on October 1, 2020, and successfully completes the payment plan on October 1, 2021, the late fees and interest that accrued from October 2020 to October 2021 should be waived at the end of the payment plan.
- What is the difference between a stipulation and a payment plan?
- A stipulation is a payment plan that will be filed with the court because a lawsuit has been initiated. The court will typically approve the stipulation. Then, if the owner defaults on the stipulation payments, the association can request default judgment against the owner for failing to comply with the stipulation. In contrast, payment plans are set up before a lawsuit is filed or after judgment has been obtained.
- Does the board have to authorize payment plans for owners that have been turned over to the attorney?
- No, but it can if it wants to. Many collection policies provide that payment plans will be set up and monitored through the attorney once the file is turned over for collection. Also, some attorneys will have Boards agree on parameters of payment plans ahead of time, which allows the attorney to enter into a payment plan that falls within these parameters without having to obtain specific approval of each such plan.
- Can the board set general parameters for payment plans that are with the attorney?
- It is not feasible or efficient for a board to approve each and every payment plan that is requested since that will delay the files and collection of monies from the owner, owners are often requesting payment plans while they are at our office or in court with us, and the payment plans that are requested on files that are within the court system are subject to court deadlines. But if the board has certain parameters that it wants in place for payment plans, then let’s discuss those when the association comes on board with us. For example, some associations want to limit the term of the payment plans to 6 or 8 months. Other associations prefer a minimum dollar amount for a payment plan (e.g. $125.00 per month toward the delinquency). We would love to talk with you about what the best courses of action may be for your association.
Please do not hesitate to contact an Altitude attorney if you have any additional questions about payment plans at 303.432.9999 or at [email protected].