New YorkS 88302025-2026 Regular SessionSenateWALLET

Relates to right of action for claims arising out of coerced debts

Sponsored By: Cordell Cleare (Democratic)

Became Law

RULESCODES

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Bill Overview

Analyzed Economic Effects

5 provisions identified: 3 benefits, 0 costs, 2 mixed.

Abusers must repay coerced debts

It is illegal to cause someone to incur coerced debt. The person who did it is civilly liable for the debt amount or portion, plus any deficiency after foreclosure, repossession, or sale of the collateral, and court costs and attorneys’ fees. If you already paid part of the coerced debt, you can recover from that person. Someone who forced you to take the debt cannot be treated as the creditor under this law.

Court help to cancel coerced debts

You can sue to have a court declare all or part of a debt is coerced. If you prove it by a preponderance of the evidence (unless the creditor shows a bona fide error), the court can cancel your liability, stop collections, dismiss cases, order credit bureaus to delete negative info, and make the other side pay your costs and attorneys’ fees. You must file detailed facts and attach the documents you gave the creditor. If a creditor sues you, you can raise coerced debt as a defense without prior notice, but you must attach the supporting documents to your answer.

Secured debt limits and start dates

The law does not cover debts secured by real estate, like mortgages. For debts secured by personal property (such as a car), the notice‑and‑review process and separate lawsuit do not apply, and the defense does not stop repossession; it only limits what you may owe as a deficiency after the sale. The coerced‑debt protections apply to debts taken on or after the 180th day after the law takes effect. One section starts on the same day as a related 2025 law on coerced‑debt rights.

Survivors can pause debt collection with proof

If you say a debt was coerced and send proof, the creditor must stop collecting within 10 business days. Acceptable proof includes a police report, a law‑enforcement report, a court order, or a signed statement from a qualified helper like a doctor, lawyer, social worker, or clergy. The creditor must finish its review in 30 business days, use only your safe contact details, avoid contacting the abuser, keep your info private, and mark the account as disputed with credit bureaus within 10 business days when applicable. The creditor must tell you within 5 business days if it will start collecting again. You can ask for reconsideration within 30 days, and the creditor must review that within 30 days; if the creditor breaks these rules and does not fix it in 15 days, you can sue for $1,000 plus any real damages and your attorneys’ fees.

State Attorney General can enforce rules

The Attorney General can sue to stop violations, get restitution, issue subpoenas, and seek civil penalties up to $5,000 per violation, unless it was a bona fide error. The Attorney General must give at least 15 days’ notice before asking a court for an injunction. The article applies only to actual creditors, adds no duties beyond what it says, and creditors can challenge fraudulent coerced‑debt claims.

Sponsors & Cosponsors

Sponsor

Cordell Cleare
Democratic • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 85 • No: 14

Senate vote • 3/5/2026

FLOOR Vote

Yes: 51 • No: 8

committee vote • 1/27/2026

Rules Committee Vote

Yes: 17 • No: 3

committee vote • 1/12/2026