Legislation

* § 604-cc. Coerced debt cause of action and affirmative defense. 1. A
debtor shall have a cause of action against a creditor in any court
having jurisdiction to issue a declaratory judgment establishing that a
debt or portion of a debt asserted to be owed to such creditor is a
coerced debt. Notwithstanding section one thousand one of the civil
practice law and rules, any individual alleged to have caused such
coerced debt to be incurred shall not be a necessary party to such
action. Such action shall not be commenced and maintained unless the
debtor has submitted a request for reconsideration under subdivision
four of section six hundred four-bb of this article of the creditor's
decision to recommence debt collection activities based on such
creditor's review of the debtor's notice of coerced debt and the
creditor either affirmed the creditor's determination that the debt is
not coerced or the debtor has not received written notice the creditor
determined that the debt is coerced debt within thirty-five days of
submitting the request for reconsideration.

2. In an action under subdivision one of this section, a debtor shall
plead the allegations of coerced debt with particularity and shall
attach the documents provided to the creditor pursuant to subdivision
one of section six hundred four-bb of this article to any complaint.

3. A debtor who establishes by a preponderance of the evidence in an
action pursuant to subdivision one of this section that a debt or
portion of a debt asserted to be owed to the creditor is coerced debt
shall, unless the creditor provides information that would otherwise
show that the determination that the debt was not coerced was the result
of the creditor's bona fide error, be entitled to the following relief:

(a) a declaratory judgment stating that the debt or portion thereof is
coerced debt and that the alleged debtor shall not be liable for such
coerced debt;

(b) an order enjoining or restraining the creditor from holding or
attempting to hold the debtor personally liable for the coerced debt or
attempting to obtain or enforce any judgment thereon against such debtor
and enjoining and restraining all future collection activities with
respect to such debt;

(c) an order dismissing any other cause of action brought by the
creditor to enforce or collect the coerced debt from the debtor;

(d) if the creditor has furnished adverse information to a consumer
reporting agency with respect to such coerced debt, an order directing
the creditor to notify such agency to delete all such adverse
information; and

(e) the costs and attorneys' fees reasonably incurred in bringing such
action.

4. In any action by a creditor against a debtor to collect a debt, it
shall be an affirmative defense to such action that all or a portion of
the debt is coerced debt. Providing notice to the creditor under section
six hundred four-bb of this article shall not be a prerequisite to
asserting such defense; provided, however, the documents described in
subdivision one of section six hundred four-bb of this article shall be
annexed to the debtor's answer. Notwithstanding section one thousand one
of the civil practice law and rules, any individual alleged to have
caused such coerced debt to be incurred shall not be or become a
necessary party to such action.

5. An action pursuant to subdivision one of this section shall be
commenced within three years after the date on which the debtor provided
the notice of coerced debt pursuant to section six hundred four-bb of
this article to the creditor; provided, however, that if such creditor,
its assignor, or any assignee recommences collection activities on the
debt after ceasing collection activities on such debt based on such
creditor's review of the debtor's claim of coerced debt, such debtor
shall have the right to file a subsequent notice of coerced debt
pursuant to subdivision six of section six hundred four-bb of this
article and the statute of limitations shall commence on the date on
which such debtor provided such subsequent notice of coerced debt.

6. If requested by the debtor, the court presiding over any action in
which coerced debt is raised as a claim or affirmative defense shall
take appropriate steps necessary to prevent abuse of such debtor or an
immediate family member of such debtor, including but not limited to the
sealing of court records, the redaction of such debtor's or their
immediate family member's personal information, and/or directing that
any disposition or hearing be held remotely.

7. The provisions of this article shall not be construed so as to
prevent a creditor from enforcing any claim or collecting judgment
arising out of a lawful debt or portion thereof from any other person or
entity other than the coerced debtor.

8. Collection activities, for the purpose of this section, do not
include any communication between a creditor or debtor that is required
by state or federal law or regulation.

* NB Effective June 17, 2026