Abuse survivors can challenge debts tied to coercion starting in 2028

Starting July 1, 2028, an eligible debtor may dispute qualifying debt as coerced. After receiving the required statement and supporting proof, the creditor must pause collection and investigate. The debtor must be a survivor of domestic abuse or human trafficking, or a vulnerable adult who survived abuse, neglect, or exploitation. The debtor must provide a sworn statement and at least one accepted document: a law enforcement report, a court order, or a qualified professional’s sworn certification. The debt must stem from domestic abuse, human trafficking, or abuse, neglect, or exploitation of a vulnerable adult through unauthorized use of personal information or force, intimidation, fraud, or similar means. Mortgage and commercial loans are excluded. These protections take effect July 1, 2028, and apply to all outstanding coerced debt, including debt incurred earlier.

A creditor must investigate a supported claim and tell the debtor its decision. If it finds the debt was coerced, it must stop collection and ask credit reporting agencies to remove related information. These rules apply when a creditor receives a debtor’s statement of coerced debt and adequate documentation. If the information does not establish coerced debt, the creditor may resume collection but may not sell, assign, or transfer the debt. For debt secured by personal property, the creditor may still enforce its security interest after default, but cannot collect a remaining shortfall from the debtor. A creditor must pause collection within 10 business days after receiving the statement and proof, complete its investigation within 30 days, and notify the debtor within five business days after deciding.

A bank, trust company, savings institution, or credit union may delay or refuse certain account transactions to protect a customer from suspected financial exploitation. The authority covers customer accounts at banks, trust companies, savings institutions, and credit unions. The institution must reasonably believe exploitation happened or was attempted, based on its own observations or information from a state, local, or law enforcement agency. It is not required to take protective action. A delay generally ends within 15 business days, but may be extended by up to 15 more days if the institution reasonably believes exploitation may continue. A court may order funds released sooner. These account protections took effect on passage. A delay ends within 15 business days unless an earlier event or court order ends it; an eligible extension may add up to 15 business days.