The clock starts ticking on an auto loan when the first payment is received. If an auto loan is not repaid according to the terms and conditions of the auto loan contract, the lender can sue the borrower for the defaulted amount plus attorney's fees. Colorado has one of the most moderate statutes of limitations on consumer debt in the country.
Identification
Colorado car loans do not have a three-year statute of limitations. All written contracts, oral agreements, open accounts and promissory notes have a six-year statute of limitations in Colorado. Under Colorado law, lenders can only file a lawsuit in a state court for the collection of a bad debt if the statute of limitations has not expired. When the statute of limitations expires, the lender must either attempt to collect the debt outside of court or abandon the debt altogether.
Written Contracts
Colorado mandates a six-year statute of limitations on auto loans backed by a written contract. A written contract is a legally binding printed document that has been signed by a payer and a payee. Written contracts explicitly express the terms of the loan and the conditions for the repayment of the loan, including the first due date. Auto loan terms are typically 24, 36, 48, 60 or 72 months.
Considerations
According to the Cars Direct website, "Different lenders have different policies concerning how late charges are accrued for missed payments." If you've missed one or more auto loan payments and have defaulted on an auto loan contract as a result, you may still settle the debt and avoid a lawsuit. Not all lenders are willing to settle a defaulted loan for a lesser amount, but many are, depending on the default amount and age of the loan contract.
Judgments
Written contracts are easier to enforce than verbal agreements. However, the burden of proof always lies with the lender. If a lender wins a judgment for the defaulted loan, the lender must file a writ of execution to garnish a borrower's wages or place a lien on his property. Lenders can report a judgment to the three major credit bureaus -- TransUnion, Experian and Equifax -- up to 20 years later, depending on the court in which the judgment is filed. All judgments are renewable in Colorado.
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