COLORADO GENERAL ASSEMBLY MODIFIES HOMESTEAD EXEMPTION DRAMATICALLY IMPACTING ABILITY TO COLLECT ON  MONEY JUDGMENTS

By Marketing Team | January 19, 2026 | Comments Off on COLORADO GENERAL ASSEMBLY MODIFIES HOMESTEAD EXEMPTION DRAMATICALLY IMPACTING ABILITY TO COLLECT ON  MONEY JUDGMENTS

Effective April 7, 2022, the Colorado General Assembly passed SB 22-086 (which the governor then signed) which significantly modified the existing homestead exemption in Colorado.  The Homestead Exemption generally exempts from collection by creditors equity in a Colorado resident’s home.  See C.R.S. §§ 38-41-201 to 38-41-212 [1]

Prior to this change in the law, a creditor could record a judgment lien against the residential property of a Colorado resident and foreclose on the property, entitling the creditor to recover a substantial portion of the equity provided previously recorded liens were paid off from the proceeds of the sale. Before 2022, the total amount of equity that was exempt from collection in such a foreclosure action was $75,000.00 for those under the age of sixty and $105,000.00 for those sixty years of age or older.  After April 7, 2022, the amounts of equity exempt from attachment have been increased to $250,000.00 and $350,000.00 respectively dramatically reducing the amount of equity able for creditors to seize by foreclosing a judgment lien.

This change in the law has a significant impact on the ability of a judgment creditor to recover money from the proceeds of a sheriff’s foreclosure proceeding. The single largest asset available for collection for the average Colorado resident is the equity in their home and this change reduces the likelihood of collection on that asset for many people.

Before you decide to file a lawsuit or if you are being sued, you should contact RVM Law, LLC, to analyze the likelihood of collection on any money judgment obtained in the lawsuit considering the significant increase in residential equity that is now exempt from collection.

The changes in the homestead exemption impacted by SB 22-086 are summarized as follows:

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.

[1] https://advance.lexis.com/container/?pdmfid=1000516&crid=003c7214-3ffa-4b21-8ef92a4a5311ba7d&func=LN.Advance.ContentView.getFullToc&nodeid=ABOAAKAAEAABAAC&typeofentry=Breadcrumb&config=0345494EJAA5ZjE0MDIyYy1kNzZkLTRkNzktYTkxMS04YmJhNjBlNWUwYzYKAFBvZENhdGFsb2e4CaPI4cak6laXLCWyLBO9&action=publictoc&pddocfullpath=%2Fshared%2Fdocument%2Fstatutes-legislation%2Furn%3AcontentItem%3A6561-6T63-GXF6-80TC-00008-00&pdtocfullpath=%2Fshared%2Ftableofcontents%2Furn%3AcontentItem%3A62D6-BVG3-CH1B-T3RY-00008-00&ecomp=h2vckkk&prid=68147947-1897-48a3-ac9d-6a8ca6bd9204

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