On December 19, New York Governor Kathy Hochul signed Senate Bill S1353A creating a new General Business Law article on “actions involving coerced debts.” The law is aimed squarely at survivors of domestic violence, trafficking, and other forms of economic abuse who find themselves saddled with credit card balances, loans, or other consumer debts they never truly agreed to incur. Once effective (90 days after signing), it will prohibit creditors from enforcing certain coerced consumer debts against victims, create a structured process for disputing those debts, and establish robust private rights of action and defenses against collection. New York becomes the eighth state to enact protections of this kind.

What Counts as Coerced Debt and Economic Abuse?

The statute defines coerced debt broadly as consumer debt incurred as a result of economic abuse, including through “fraud, duress, intimidation, threat, force, coercion, manipulation, or undue influence,” or non‑consensual use of a debtor’s personal information. Economic abuse covers behavior in intimate or family relationships, trafficking relationships, or caregiving relationships that is coercive, deceptive, or controlling such as restricting access to money or credit, misusing someone’s personal or financial data, forcing defaults, abusing powers of attorney, or otherwise sabotaging financial stability. The law focuses on consumer obligations (including loans, credit cards, utilities, rental arrears, and other household debts), and it distinguishes between legitimate “creditors” and the person who actually perpetrated the coercion, who cannot claim creditor status for purposes of the statute.

Disputing Coerced Debt and Halting Collection

The law creates a formal process for a debtor to notify a creditor that a particular account, or a portion of it, is coerced debt. Once the debtor submits both: (1) a sworn statement identifying the debt as coerced; and (2) “adequate documentation” (such as a police report, an FTC identity theft report, a court order, or a notarized statement from a qualifying professional like a social worker, attorney, health provider, or clergy member), the creditor must immediately cease collection activity while it investigates. Within 10 business days, the creditor must flag the account as disputed at any consumer reporting agencies it uses and within 30 business days, it must review the claim using the debtor’s submissions and its own records. Critically, during this process the creditor may not contact the alleged abuser, must use only the contact information supplied by the debtor, and may not disclose the debtor’s documentation or contact information to third parties (including joint accountholders) without the debtor’s written consent. If the creditor agrees the debt is coerced, it must stop collecting, instruct consumer reporting agencies to delete adverse information, and, if it is a collector, notify the original creditor. If it rejects the claim and resumes collection, it must explain in writing its “good faith basis,” share non‑identifying supporting documents, and advise the debtor of the right to seek reconsideration and to sue. A debtor injured by violations of these procedural protections can recover statutory damages, actual damages, and attorneys’ fees.

Private Causes of Action and Affirmative Defenses

A debtor can bring a stand‑alone civil action against a creditor asking for a declaratory judgment that a debt (or part of it) is coerced debt. If the debtor proves this by a preponderance of the evidence, the court can declare the debtor not liable for the coerced portion, enjoin current and future collection efforts, order dismissal of related collection claims, require the creditor to correct consumer reporting, and award costs and attorneys’ fees. Separately, in any lawsuit by a creditor to collect a consumer debt, the debtor can raise “coerced debt” as an affirmative defense without having first used the notice process, so long as the same type of supporting documentation is attached to the answer. Prevailing on this defense also entitles the debtor to fees and costs. The law also targets the perpetrator of the abuse: a person who caused another to incur coerced debt can be held civilly liable to the creditor and/or the debtor for the coerced amount and for reasonable litigation costs and fees. To protect survivors’ safety and privacy, courts must take steps such as sealing records, redacting personal information, or holding remote proceedings if the debtor requests it.

The Attorney General is also empowered to enforce the new coerced‑debt provisions through injunctions, restitution, and civil penalties of up to $5,000 per violation, adding a public enforcement layer to the private remedies and defenses.