Legislation

* § 604-cc. Coerced debt cause of action and affirmative defense. 1. A
person shall not cause another person to incur a coerced debt. A person
who causes another person to incur a coerced debt in violation of this
subdivision shall be civilly liable to the creditor, and/or the debtor
in whose name such coerced debt was incurred if such debtor has already
paid all or part of such coerced debt, for the amount of such debt, or
portion thereof, determined by the court to be a coerced debt, as well
as such creditor's and/or debtor's costs and attorneys' fees reasonably
incurred in bringing the action. An action under this subdivision shall
be commenced within three years of the later of: (a) the creditor's
determination that all or part of such debt is coerced debt; or (b) a
court's determination that all or part of such debt is coerced debt.

2. (a) 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
following conditions are satisfied:

(i) (1) the debtor provides by first class mail with certification of
mailing, certified mail, overnight delivery, or other method that allows
for confirmation of the date of mailing, the notice of coerced debt or
subsequent notice of coerced debt under section six hundred four-bb of
this article, provided, however, that receipt of the notice of coerced
debt shall not be a condition to bringing such action if it is sent in a
properly addressed envelope; and

(2) the thirty-day period under paragraph (b) of subdivision three of
section six hundred four-bb of this article has expired and the debtor
has not received written notice that collection activities have ceased;
or

(ii) the debtor receives a written determination under paragraph (c)
of subdivision three of section six hundred four-bb of this article that
the particular disputed debt is not coerced debt.

(b) The submission of 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 is not a
condition to commencing an action under this subdivision.

3. In an action under subdivision two 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.

4. A debtor who establishes by a preponderance of the evidence in an
action pursuant to subdivision two of this section that a debt or
portion of a debt asserted to be owed to the creditor is coerced debt
shall 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.

5. 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. A debtor who prevails on an affirmative
defense of coerced debt shall be entitled to the costs and attorneys'
fees reasonably incurred in defending against the action.
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.

6. An action pursuant to subdivision two 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 seven 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.

7. 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.

8. 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.

9. For debts secured by real or personal property, the private cause
of action and affirmative defense authorized by this section shall
affect only the debtor's liability for any deficiency after the
foreclosure, repossession, or surrender and disposition of the subject
collateral.

10. Whenever there shall be a violation of this section, an
application may be made by the attorney general in the name of the
people of the state of New York to a court or justice having
jurisdiction to issue an injunction, and upon notice to the defendant of
not less than five days, to enjoin and restrain the continuance of such
violations. If it shall appear to the satisfaction of the court or
justice that the defendant has, in fact, violated this section, an
injunction may be issued by such court or justice, enjoining or
restraining any violation, without requiring proof that any person has,
in fact, been injured or damaged thereby. In any such proceeding the
court may make allowances to the attorney general as provided in section
eighty-three hundred three of the civil practice law and rules, and may
make direct restitution. In connection with any such proposed
application, the attorney general is authorized to take proof and make a
determination of the relevant facts and to issue subpoenas in accordance
with the civil practice law and rules. Whenever the court shall
determine that a violation of this section has occurred, the court may
impose a civil penalty for each violation up to five thousand dollars.

* NB Effective March 19, 2026