Homestead Exemption And Consumer Debt Protection

Colorado's statutory homestead exemption exempts a portion of a homestead from seizure to satisfy a debt, contract, or civil obligation. Section 2 increases the amount of the homestead exemption:

• From $75,000 to $250,000 if the homestead is occupied as a home by an owner of the home or an owner's family; and
• From $105,000 to $350,000 if the homestead is occupied as a home by an owner who is elderly or disabled, an owner's spouse who is elderly or disabled, or an owner's dependent who is elderly or disabled.

Section 3 expands the meaning of "homestead" to expressly include a "dwelling", and section 4 defines a dwelling as conventional housing and personal property that is actually used as a residence, including any vehicle, trailer, vessel, camper coach, mounted equipment, railway car, shipping or cargo container, shed, yurt, or tiny home.

Under current law, the proceeds from a homestead exemption or, if a homestead property is sold by the owner, the proceeds from the sale are exempt from execution or attachment for a period of 2 years if the person entitled to the exemption keeps the exempted proceeds separate and apart from other money. Section 5 expands this period to 3 years and extends the exemption to apply to proceeds from insurance covering destruction of homestead property, which proceeds are held for use in restoring or replacing the homestead property.

Section 6 increases the maximum amounts of existing exemptions from levy and sale under a writ of attachment or execution for certain types of property and creates new exemptions for:

• Firearms and hunting and fishing equipment;
• Economic impact payments;
• Health savings accounts; and
• Money placed into a life expectancy set-aside account or similar reserve fund, escrow, or impound account, which money is derived from reverse mortgage proceeds that are designated for specific uses.

Section 6 also recreates and decreases an exemption for money in depository accounts.

Sections 6, 7, and 8 remove a requirement that a person must deposit child support payments in an account designated for the child and, with regard to child support payments and unemployment benefits, not commingle funds in order to claim an exemption for child support payments or an exemption for unemployment benefits.

(Note: This summary applies to this bill as enacted.)