§ 604-CC — Coerced debt cause of action and affirmative defense

* § 604-cc. Coerced debt cause of action and affirmative defense. 1. A\nperson shall not cause another person to incur a coerced debt. A person\nwho causes another person to incur a coerced debt in violation of this\nsubdivision shall be civilly liable to the creditor, and/or the debtor\nin whose name such coerced debt was incurred if such debtor has already\npaid all or part of such coerced debt, for the amount of such debt, or\nportion thereof, determined by the court to be a coerced debt, as well\nas such creditor's and/or debtor's costs and attorneys' fees reasonably\nincurred in bringing the action. An action under this subdivision shall\nbe commenced within three years of the later of: (a) the creditor's\ndetermination that all or part of such debt is coerced debt; or (b) a\ncourt's determination that all or part of such debt is coerced debt.\n 2. (a) A debtor shall have a cause of action against a creditor in any\ncourt having jurisdiction to issue a declaratory judgment establishing\nthat a debt or portion of a debt asserted to be owed to such creditor is\na coerced debt. Notwithstanding section one thousand one of the civil\npractice law and rules, any individual alleged to have caused such\ncoerced debt to be incurred shall not be a necessary party to such\naction. Such action shall not be commenced and maintained unless the\nfollowing conditions are satisfied:\n (i) (1) the debtor provides by first class mail with certification of\nmailing, certified mail, overnight delivery, or other method that allows\nfor confirmation of the date of mailing, the notice of coerced debt or\nsubsequent notice of coerced debt under section six hundred four-bb of\nthis article, provided, however, that receipt of the notice of coerced\ndebt shall not be a condition to bringing such action if it is sent in a\nproperly addressed envelope; and\n (2) the thirty-day period under paragraph (b) of subdivision three of\nsection six hundred four-bb of this article has expired and the debtor\nhas not received written notice that collection activities have ceased;\nor\n (ii) the debtor receives a written determination under paragraph (c)\nof subdivision three of section six hundred four-bb of this article that\nthe particular disputed debt is not coerced debt.\n (b) The submission of a request for reconsideration under subdivision\nfour of section six hundred four-bb of this article of the creditor's\ndecision to recommence debt collection activities based on such\ncreditor's review of the debtor's notice of coerced debt is not a\ncondition to commencing an action under this subdivision.\n 3. In an action under subdivision two of this section, a debtor shall\nplead the allegations of coerced debt with particularity and shall\nattach the documents provided to the creditor pursuant to subdivision\none of section six hundred four-bb of this article to any complaint.\n 4. A debtor who establishes by a preponderance of the evidence in an\naction pursuant to subdivision two of this section that a debt or\nportion of a debt asserted to be owed to the creditor is coerced debt\nshall be entitled to the following relief:\n (a) a declaratory judgment stating that the debt or portion thereof is\ncoerced debt and that the alleged debtor shall not be liable for such\ncoerced debt;\n (b) an order enjoining or restraining the creditor from holding or\nattempting to hold the debtor personally liable for the coerced debt or\nattempting to obtain or enforce any judgment thereon against such debtor\nand enjoining and restraining all future collection activities with\nrespect to such debt;\n (c) an order dismissing any other cause of action brought by the\ncreditor to enforce or collect the coerced debt from the debtor;\n (d) if the creditor has furnished adverse information to a consumer\nreporting agency with respect to such coerced debt, an order directing\nthe creditor to notify such agency to delete all such adverse\ninformation; and\n (e) the costs and attorneys' fees reasonably incurred in bringing such\naction.\n 5. In any action by a creditor against a debtor to collect a debt, it\nshall be an affirmative defense to such action that all or a portion of\nthe debt is coerced debt. Providing notice to the creditor under section\nsix hundred four-bb of this article shall not be a prerequisite to\nasserting such defense; provided, however, the documents described in\nsubdivision one of section six hundred four-bb of this article shall be\nannexed to the debtor's answer. A debtor who prevails on an affirmative\ndefense of coerced debt shall be entitled to the costs and attorneys'\nfees reasonably incurred in defending against the action.\nNotwithstanding section one thousand one of the civil practice law and\nrules, any individual alleged to have caused such coerced debt to be\nincurred shall not be or become a necessary party to such action.\n 6. An action pursuant to subdivision two of this section shall be\ncommenced within three years after the date on which the debtor provided\nthe notice of coerced debt pursuant to section six hundred four-bb of\nthis article to the creditor; provided, however, that if such creditor,\nits assignor, or any assignee recommences collection activities on the\ndebt after ceasing collection activities on such debt based on such\ncreditor's review of the debtor's claim of coerced debt, such debtor\nshall have the right to file a subsequent notice of coerced debt\npursuant to subdivision seven of section six hundred four-bb of this\narticle and the statute of limitations shall commence on the date on\nwhich such debtor provided such subsequent notice of coerced debt.\n 7. If requested by the debtor, the court presiding over any action in\nwhich coerced debt is raised as a claim or affirmative defense shall\ntake appropriate steps necessary to prevent abuse of such debtor or an\nimmediate family member of such debtor, including but not limited to the\nsealing of court records, the redaction of such debtor's or their\nimmediate family member's personal information, and/or directing that\nany disposition or hearing be held remotely.\n 8. The provisions of this article shall not be construed so as to\nprevent a creditor from enforcing any claim or collecting judgment\narising out of a lawful debt or portion thereof from any other person or\nentity other than the coerced debtor.\n 9. For debts secured by real or personal property, the private cause\nof action and affirmative defense authorized by this section shall\naffect only the debtor's liability for any deficiency after the\nforeclosure, repossession, or surrender and disposition of the subject\ncollateral.\n 10. Whenever there shall be a violation of this section, an\napplication may be made by the attorney general in the name of the\npeople of the state of New York to a court or justice having\njurisdiction to issue an injunction, and upon notice to the defendant of\nnot less than five days, to enjoin and restrain the continuance of such\nviolations. If it shall appear to the satisfaction of the court or\njustice that the defendant has, in fact, violated this section, an\ninjunction may be issued by such court or justice, enjoining or\nrestraining any violation, without requiring proof that any person has,\nin fact, been injured or damaged thereby. In any such proceeding the\ncourt may make allowances to the attorney general as provided in section\neighty-three hundred three of the civil practice law and rules, and may\nmake direct restitution. In connection with any such proposed\napplication, the attorney general is authorized to take proof and make a\ndetermination of the relevant facts and to issue subpoenas in accordance\nwith the civil practice law and rules. Whenever the court shall\ndetermine that a violation of this section has occurred, the court may\nimpose a civil penalty for each violation up to five thousand dollars.\n * NB Effective March 19, 2026\n