Prohibits creditors from enforcing a consumer debt incurred as a result of fraud, duress, intimidation, threat, force, identity theft, exploitation of the debtor's personal information or similar economic abuse perpetrated against a debtor; establishes a right of action by the debtor for relief against creditors for violations; makes related provisions.
This bill creates a new article in New York’s General Business Law addressing “coerced debt,” defined as debt incurred through economic abuse, including fraud, duress, intimidation, threats, force, coercion, manipulation, undue influence, or the non-consensual use of a debtor’s personal information. It applies to consumer debts and is designed to protect people in intimate relationships, family or household relationships, trafficking situations, and relationships involving children, older adults, or other vulnerable people and their caregivers.
The bill establishes a formal notice-and-review process for debtors who claim a debt was coerced. After receiving adequate documentation and a sworn statement from the debtor, a creditor must pause collection activity while it reviews the claim, notify credit reporting agencies if the debt is disputed, avoid contacting the alleged abuser, and keep the debtor’s information confidential. If the creditor concludes the debt is not coerced and resumes collection, it must give written notice and supporting reasons; if it concludes the debt is coerced, it must stop collection, direct credit bureaus to delete adverse information, and, if applicable, notify the original creditor.
The bill also creates a private right of action and an affirmative defense. A debtor may sue for a declaratory judgment that the debt is coerced, seek an injunction against collection, obtain deletion of adverse credit reporting, and recover costs and attorneys’ fees. A person who caused the coerced debt may be held civilly liable to the creditor and/or debtor for the amount determined to be coerced, and the Attorney General may seek injunctive relief and civil penalties for violations. The bill also provides special court protections, such as sealing records or remote proceedings, when needed to prevent abuse.
Its impact on state law is to add a new consumer-protection and debt-dispute framework to the General Business Law, expanding remedies against debt collection tied to abuse and identity misuse. It would affect creditors, debt collectors, consumer reporting agencies, courts, and survivors seeking to challenge debts incurred through coercive conduct. It also limits how creditors may communicate during review and bars disclosure of sensitive information to third parties without consent.
The overall sentiment in committee appears generally supportive, as reflected by favorable votes at multiple stages, but not unanimous. The bill advanced from Consumer Affairs and Protection, then Codes, then Rules, with notable minority opposition at each step, suggesting broad agreement with the goal of protecting survivors and vulnerable debtors, alongside concerns about implementation, evidentiary standards, and creditor rights.
The main points of contention are likely the burden placed on creditors to halt collection and investigate claims, the scope of what qualifies as “coerced debt” and “economic abuse,” and the evidentiary requirements for debtors to prove their claims. Another likely issue is the balance between protecting victims and preventing misuse of the process, especially because the bill allows statutory damages, attorney’s fees, and Attorney General enforcement while also restricting creditor contact and disclosure during review.
The bill would amend the General Business Law by adding Article 29-HHH, creating a new statutory process for disputing and litigating consumer debts alleged to have been incurred through coercion or economic abuse. It imposes duties on creditors to stop collection temporarily, investigate claims, notify consumer reporting agencies, protect confidentiality, and, in some cases, cease collection permanently and delete adverse credit information. It also creates a new private cause of action, an affirmative defense in debt collection suits, and Attorney General enforcement authority with civil penalties.
Committee action suggests the bill has generally favorable support, with repeated approvals to move it forward through Assembly committees. However, the non-unanimous vote margins indicate some reservations among members, likely reflecting concern about the bill’s effect on debt collection practices, the scope of the new cause of action, and the administrative burden on creditors and courts. Overall, the sentiment appears sympathetic to survivors of abuse and economic coercion, while still reflecting caution about implementation and proof issues.
The most notable contention is between consumer/survivor advocates and creditor or collection interests. Supporters are likely focused on protecting people whose debts were created through abuse, identity theft, or coercive control, especially in domestic violence, trafficking, and elder abuse contexts. Opponents or skeptics are likely concerned that the bill could be difficult to administer, could be invoked in disputed debt cases, and could require creditors to suspend collection based on allegations before final adjudication. The bill’s documentation requirements, confidentiality rules, and broad remedies are also likely areas of debate.