The bill addresses economic abuse and coerced debt in the context of debt collection and consumer reporting. Here's a breakdown of the key provisions:
Cease Collection of Debt (Sections 2 and 5):
Debt collectors must cease collection of a debt or any disputed portion if the consumer notifies them in writing that the debt (or part of it) is a result of economic abuse or coerced debt.
The consumer must provide:
A written statement declaring that the debt is the result of economic abuse or coerced debt.
Sufficient documentation to support the claim.
Debt collectors must halt collection efforts until they obtain a court order, decree, or judgment confirming that the debt was not caused by economic abuse or coerced debt.
Prohibition on Collecting Coerced Debt (Sections 3 and 4):
Debt collectors cannot collect or attempt to collect any debt that the consumer claims is the result of economic abuse or coerced debt unless the debt collector first obtains a court decree, judgment, or order confirming that the debt was not coerced or economically abusive.
Consumer Reporting Agencies (Sections 6 and 7):
Consumer reporting agencies are authorized to reinvestigate items in a consumer’s credit report that are disputed on the grounds of economic abuse or coerced debt.
This process must be done free of charge, similar to how other disputes are handled.
Inclusion in Protection Orders (Section 8):
The bill expands the definition of coercion in the context of civil protection orders issued in domestic violence cases to include economic abuse and coerced debt.
Summary:
Debt collectors and consumer reporting agencies are required to stop collections or reinvestigate debts if the consumer asserts the debt is the result of economic abuse or coercion.
A court order is necessary for debt collectors to proceed with collection efforts or challenge the claim.
The bill strengthens protections for consumers who have been subjected to financial manipulation or abuse within domestic violence contexts.
Summary
Sections 2 and 5 of the bill require a creditor, debt collector, or
debt collection agency to cease collection of a debt or any disputed portion of a debt if a consumer notifies the creditor, debt collector, or collection agency in writing that the debt or a portion of the debt is the result of economic abuse or coerced debt and provides a written statement of coerced debt and sufficient documentation to the creditor, debt collector, or collection agency until the debt collector or collection agency obtains a decree, judgment, or court order finding the debt was not the result of economic abuse or coerced debt. Sections 3 and 4 prohibit a debt collector or debt collection
agency from collecting or attempting to collect any debt that is the result of economic abuse or coerced debt unless the debt collector or debt collection agency first obtains a decree, judgment, or court order finding the debt was not the result of economic abuse or coerced debt.
Current law requires a consumer reporting agency to reinvestigate
a disputed item in the consumer's file free of charge. Sections 6 and 7 authorize a consumer reporting agency to reinvestigate an item that the consumer asserts is the result of economic abuse or coerced debt. Section 8 adds economic abuse and coerced debt to the definition
of coercion as it relates to civil protection orders issued in cases of domestic violence.
