The Defenders ensemble cast mini-series happen between S2 and S3. That does not in fact answer your question, but hey stuff happens there.
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Never knew that, thank you
Matt doesn’t have a good idea of who he wants to be at the start of s3. He doesn’t like himself anymore as Murdock or as the Devil. He also wound up in a situation where he didn’t have easy access to his armor, and he kind of resented it anyway. He wants to get hurt, and he thinks he deserves it. So he doesn’t bother trying to salvage it, he decides it isn’t worth the effort. And then later this choice comes back to haunt him.
It's been a while since I watched it. I believe the implied story reason is that the red suit was too damaged by the S2 finale to keep wearing it. Correction: too damaged by the Defenders sequence between S2 and S3.
The practical reason is that S3 introduces another character that wears red, and they wanted it to be easier to distinguish who's who in dark environments.