A4651

An Act concerning coerced debt and supplementing Title 56 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. No person shall cause another person to incur coerced debt. A person aggrieved by a violation of this act may bring an action in a court of competent jurisdiction for relief from coerced debt caused by a perpetrator of coerced debt.

b. Upon a finding by a court that a person is a perpetrator of coerced debt, and to the extent permitted by federal law, the court shall issue an order:

(1) absolving the aggrieved person of liability for the coerced debt;

(2) prohibiting any creditor or collection agency from attempting to collect the coerced debt from the aggrieved person;

(3) prohibiting a credit bureau or credit reporting agency from using coerced debt in the calculation of an aggrieved person’s credit score or rating;

(4) assigning the liability for the coerced debt to the perpetrator of the coerced debt;

(5) requiring the perpetrator of coerced debt to reimburse the aggrieved person for any financial loss incurred as a result of the coerced debt; and

(6) any additional relief available under State law.

c. An aggrieved person whose debt has been absolved by a court order in accordance with this act shall notify any reporting agency, collection agency, credit bureau, or other entity to whom the creditor reported information concerning the debt that the debt is the result of economic abuse or coerced debt and request that the reporting agency remove from its files any reference to the debt or any portion of the debt determined by the reporting agency, collection agency, credit bureau, or other entity to be the result of economic abuse or coerced debt as that debt relates to the aggrieved person. Within 10 days from the date of receipt of this notice, any reporting agency, collection agency, credit bureau, or other entity shall take action to remove reference of the coerced debt as it relates to the aggrieved person from its files and shall notify the creditor of the court order. Upon receipt of the court order, a creditor shall not pursue collection of coerced debt from the aggrieved person.

d. A creditor, reporting agency, collection agency, credit bureau, or other entity that violates this act shall be liable in a civil action brought pursuant to this act for actual damages and reasonable attorney’s fees. Nothing in this act shall be construed to prohibit a creditor from taking any action to collect a debt from a perpetrator of coerced debt.

e. As used in this act:

“Coerced debt” means all or a portion of debt in a debtor's name that has been incurred as a result of:

(1) the use of the debtor's personal information without the debtor's knowledge, authorization, or consent;

(2) the use or threat of force, intimidation, undue influence, fraud, deception, coercion, or other similar means against the debtor; or

(3) economic abuse perpetrated against the debtor.

Coerced debt does not include secured debt.

“Creditor” means a person, or the person's successor, assignee, or agent, claiming to own or have the right to collect a debt owed by the debtor.

“Economic abuse” means behavior that controls, restrains, restricts, impairs, or interferes with the ability of a debtor to acquire, use, or maintain economic resources, including but not limited to:

(1) withholding or restricting access to, or the acquisition of, money, assets, credit, or financial information;

(2) interfering with the victim's ability to work and earn wages; or

(3) exerting undue influence over a person's financial and economic behavior or decisions.

“Perpetrator of coerced debt” means a person who causes coerced debt to be incurred by another.

2. This act shall take effect immediately.

STATEMENT

This bill prohibits a person from causing another person to incur coerced debt. Under the bill, any person aggrieved by a violation of the bill’s provisions may bring an action in a court of competent jurisdiction for relief from any coerced debt caused by a perpetrator of coerced debt.

Upon a finding by a court that a person is a perpetrator of coerced debt, and to the extent permitted by federal law, the court is required to issue an order:

(1) absolving the aggrieved person of liability for the coerced debt;

(2) prohibiting any creditor or collection agency from attempting to collect the coerced debt from the aggrieved person;

(3) prohibiting a credit bureau or credit reporting agency from using coerced debt in the calculation of an aggrieved person’s credit score or rating;

(4) assigning the liability for the coerced debt to the perpetrator of the coerced debt;

(5) requiring the perpetrator of coerced debt to reimburse the aggrieved person for any financial loss incurred as a result of the coerced debt; and

(6) any additional relief available under State law.

Further, the bill prohibits a creditor from continuing to pursue collection of coerced debt from an aggrieved person, and it prohibits a reporting agency, collection agency, credit bureau, or other entity to whom the creditor reported information concerning the debt from using that information as it relates to the aggrieved person. The bill provides for penalties for violations of its provisions. Nothing in the bill is to be construed to prohibit a creditor from taking any action to collect a debt from a perpetrator of coerced debt.