In March 2025, New York enacted an important new statutory framework addressing coerced debt, i.e. debt incurred through economic abuse, by an intimate partner, family member, or other abuser. Codified at General Business Law §§ 604-AA through 604-DD, this legislation creates new procedural protections and private causes of action for victims.

This post provides a detailed walkthrough of the statute’s key provisions, the process for asserting coerced debt claims, and the new causes of action that will be available to victims starting on March 19, 2026.

Why Coerced Debt Legislation Matters

Unlike identity theft by strangers, coerced debt typically occurs in the context of intimate relationships where the perpetrator already possesses everything needed to open fraudulent accounts or coerce the victim into incurring debt: access to mail, knowledge of passwords and security questions, Social Security numbers, and personal information accumulated during the relationship. The same dynamics that facilitate abuse—control, intimidation, and access—also make detection and reporting more difficult.

According to the National Consumer Law Center’s 2025 survey on coerced debt, 97% of domestic violence advocates report minimal success disputing coerced debt through traditional credit reporting agency processes. Existing consumer protection laws were simply not designed to address debts incurred through abuse, fraud, or coercion by intimate partners. New York’s statute is a welcome effort to address this gap.

Who Is Covered

The statute protects debtors who have incurred “coerced debt”—defined as debt resulting from “economic abuse” through fraud, duress, intimidation, threat, force, coercion, manipulation, undue influence, or the non-consensual use of the debtor’s personal information. The statute applies within several relationship contexts: intimate relationships, family or household members, victims of human trafficking and their traffickers, and relationships involving children, the elderly, or individuals eligible for protective services and their caregivers.

“Economic abuse” is defined broadly to include behavior that is coercive, deceptive, manipulative, or that controls, restrains, or sabotages a person’s ability to acquire, use, or maintain economic resources. This includes restricting access to money, assets, credit, or financial information; unfairly using a person’s personal information or economic resources; and exerting undue influence over financial behavior, including forcing default on obligations or exploiting powers of attorney or guardianship.

The statute covers consumer “debt”, which is defined to mean any obligation to pay money arising from a transaction primarily for personal, family, or household purposes, whether or not reduced to judgment. This includes, for example, credit cards, personal loans, auto financing, rental arrears, and insurance obligations.

The Notice of Coerced Debt Process

Required Documentation. Under § 604-BB, a debtor may submit a “notice of coerced debt” to a creditor. The notice must include two components.

First, the debtor’s sworn or notarized statement that a particular debt or portion thereof is coerced debt.

Second, “adequate documentation of coerced debt,” which the statute defines as documentation identifying the particular debt, stating it is coerced, and describing the circumstances. Importantly, the debtor need only provide one of the following forms of documentation: a police report; a Federal Trade Commission identity theft report identifying the debt as coerced; a court order setting forth findings of coerced debt; or a written verification from a “qualified third party” to whom the debtor reported the coerced debt.

Qualified Third Parties. The statute defines “qualified third party” broadly to include: law enforcement officers; employees of state courts; attorneys, physicians, psychiatrists, psychologists, social workers, registered nurses, therapists, or clinical professional counselors licensed in any state; persons employed by or working on behalf of government or non-profit offices that advise or provide services regarding domestic violence, family violence, human trafficking, or abuse; and members of the clergy.

Creditor Obligations and Timelines

Upon Receipt of Incomplete Notice. If a debtor notifies a creditor that a debt is coerced but does not provide the required documentation, or the documentation is insufficient, the creditor must provide written notice containing prescribed statutory language explaining the debtor’s rights and the documentation requirements. The notice must be provided in all capital letters and must include the creditor’s designated address and phone number.

Upon Receipt of Complete Notice. Once the creditor receives complete documentation, it must cease collection activities and begin its review process. Within ten business days of receiving the notice, if the creditor furnishes adverse information to a consumer reporting agency, it must notify the agency that the account is disputed. Within thirty business days, the creditor must complete a review considering all information provided by the debtor and other information available in the creditor’s file.

Safety Protections During Review. The statute includes important safety provisions. During its review, the creditor may not directly or indirectly contact the individual accused of causing the coerced debt. The creditor must use only the contact information the debtor provides with the notice—not any other contact information associated with the account. The creditor may not disclose the debtor’s documents, information, or contact information to any other person, including joint account holders, without the debtor’s express written authorization. Sending materials to any address other than the one provided by the debtor constitutes unlawful disclosure.

After Completing Review. If the creditor determines the debt is coerced and ceases collection activities, it must within five business days: notify the debtor in writing; contact consumer reporting agencies and instruct them to delete the information; and if the creditor is also a debt collector, notify the original creditor. If the creditor determines the debt is not coerced and recommences collection, it must within five business days notify the debtor in writing of its determination and good faith basis, enclose supporting documents (without another person’s personally identifiable information), and notify the debtor of reconsideration rights.

Reconsideration Rights

If a creditor determines that the debt is not coerced and recommences collection, the debtor may request reconsideration within thirty days of the mailing date of the creditor’s written determination. The debtor may submit additional adequate documentation. The creditor must complete its reconsideration review within thirty days of receiving the request. Importantly, submitting a request for reconsideration is not a prerequisite to filing suit.

New Causes of Action (Effective March 19, 2026)

Damages for Creditor Violations. Under § 604-BB(8), a debtor injured by a creditor’s violation of the notice procedures has a cause of action for statutory damages of $1,000, actual damages (if any), and costs and attorneys’ fees.

Declaratory Judgment Action. Under § 604-CC(2), a debtor may bring a declaratory judgment action against a creditor to establish that a debt is coerced. The action may be commenced after the debtor provides proper notice and either: the thirty-day review period has expired without written notice that collection has ceased; or the debtor receives a written determination that the debt is not coerced. The debtor must plead allegations of coerced debt with particularity and attach the documents provided to the creditor. Notably, the individual alleged to have caused the coerced debt is explicitly not a necessary party—the victim need not join or even name the abuser.  The statute’s declaratory judgment provision also provides for costs and reasonable attorney’s fees to the prevailing consumer. 

Against the Perpetrator. Under § 604-CC(1), a person who causes another to incur coerced debt is civilly liable to the creditor and/or to the debtor (if the debtor has already paid all or part of the debt) for the amount of the coerced debt plus costs and attorneys’ fees. The statute of limitations is three years from the later of the creditor’s determination or a court’s determination that the debt is coerced.

Relief Available. A debtor who prevails in a declaratory judgment action is entitled to: a declaratory judgment that the debt is coerced and the debtor is not liable; an injunction prohibiting the creditor from holding the debtor liable or enforcing any judgment; dismissal of any creditor’s collection action; if adverse information was furnished to a consumer reporting agency, an order directing the creditor to instruct the agency to delete it; and costs and attorneys’ fees.

Affirmative Defense. In any creditor collection action, the debtor may assert coerced debt as an affirmative defense. Prior notice to the creditor under § 604-BB is not required, but the supporting documentation must be attached to the answer. A debtor who prevails on this defense is entitled to costs and attorneys’ fees.

Court Protections for Victims

Recognizing the safety concerns inherent in these cases, the statute requires courts to take appropriate steps upon request to prevent abuse of the debtor or immediate family members. This includes sealing court records, redacting personal information, and conducting hearings remotely.

Important Limitations

The statute includes several important limitations practitioners should understand.

• Most importantly, the procedural protections outlined above do not prevent a creditor who follows all of the relevant steps and considers the evidence of coercion in good faith from deciding against the victim and recommencing collection efforts and credit reporting.
• Ceasing collection does not toll the statute of limitations on collection actions.
• The statute does not prevent creditors from collecting from persons other than the coerced debtor.
• For debts secured by real or personal property, the private cause of action affects only the debtor’s liability for any deficiency after foreclosure, repossession, or disposition of collateral.

Looking Forward

Because NYGBL 604-AA is a brand new statute, there is no case law yet interpreting its provisions. Nevertheless, the statute represents a significant and positive development in consumer protection law. New York joins a growing number of states—including California, Minnesota, Illinois, Connecticut, and Nevada—that have enacted specific coerced debt legislation.

For New York practitioners representing victims of domestic violence, elder abuse, or trafficking, these new provisions offer additional tools to address the lasting financial damage caused by economic abuse. For domestic violence advocates and family law practitioners who encounter clients with coerced debt issues, understanding this statutory framework—and the federal Fair Credit Reporting Act, Electronic Funds Transfer Act, and Fair Credit Billing Act claims that may run parallel to it—is essential to helping clients achieve both safety and financial recovery.

Schlanger Law Group represents victims of coerced debt and credit reporting abuse in New York and throughout the United States. If you are affected by coerced debt—or are an advocate or attorney with a client who is—contact us to discuss how this new statute and other federal and state consumer protection laws may help.