COLLECTION AGENCY COERCED DEBT
HB3352 amends the Illinois Collection Agency Act to create a new legal framework for “coerced debt,” which is debt incurred because of fraud, duress, intimidation, threats, force, coercion, undue influence, or non-consensual use of a debtor’s personal information in the context of abuse or human trafficking. The bill defines key terms such as coerced debt, perpetrator of coerced debt, debt buyer, and qualified third party, and it requires the Department of Financial and Professional Regulation to publish model forms for debtors and third-party verifications.
The bill gives a debtor a process to assert that a debt is coerced by submitting a written statement and supporting documentation to a collection agency. Once a complete statement is received, the collection agency must pause pre-judgment collection efforts, review the claim within 90 days, and either cease collection if the debt qualifies or issue a written good-faith denial with supporting evidence. The measure also allows coerced debt to be raised as an affirmative defense in court or arbitration, tolls limitations periods during the claim process, bars waivers of these rights, and imposes civil liability on perpetrators and penalties on collection agencies that fail to comply.
HB3352 changes the Collection Agency Act by adding Section 9.6 and expanding the regulatory duties of collection agencies, the Department of Financial and Professional Regulation, courts, and consumer reporting agencies. It creates new consumer protections for victims of domestic violence, sexual assault, stalking, abuse, exploitation, and human trafficking, while also establishing notice, documentation, and dispute-resolution procedures that collection agencies must follow. It further authorizes damages, attorney’s fees, and injunctive-type protections in related proceedings, and requires the Department to issue standardized forms within 180 days of enactment.
The voting history suggests the bill had broad support overall, passing the Illinois House 89-23 and the Senate 55-0. That pattern indicates strong bipartisan agreement in the Senate and a solid majority in the House, consistent with a measure framed around consumer protection and support for survivors of abuse and trafficking. No committee transcript was provided, so the available record does not show detailed debate or amendments, but the final votes point to generally favorable sentiment.
The main points of contention are likely to have centered on the burden placed on collection agencies and the evidentiary standard for proving coerced debt. The bill requires agencies to suspend collection activity, review claims, notify credit bureaus, and potentially delete adverse information, while also exposing agencies to damages if they do not comply. Another possible concern is the risk of misuse or false claims, which the bill addresses by requiring supporting documentation, allowing agencies to request identifying information about the alleged perpetrator, and imposing liability on a qualified third party who fraudulently certifies a claim. The bill also balances consumer protections with creditor interests by allowing collection to resume if a claim is incomplete or rejected in good faith.