Gov. Kathy Hochul is reviewing a bill that could help victims of coerced debt — a form of financial abuse that refers to non-consensual credit-related transactions demanded by an abusive partner.
State lawmakers passed a bill earlier this year that would define coerced debt in state law and prohibit lenders in the state from forcing victims to pay back the debt and go after their abusers instead.
“Whether it’s applying for credit cards, taking out car loans, it’s a way of keeping the victim under the control of the abuser,” said Assembly sponsor Linda Rosenthal, a Manhattan Democrat.
Victims of domestic violence may be forced to take on debt either by intimidation from their abuser or without them knowing. More than 90% of survivors of domestic violence experience economic abuse, according to the National Coalition Against Domestic Violence.
Rosenthal said she and Senate sponsor Cordell Cleare are in talks with Hochul’s office about the bill to give New Yorkers a path to prove they are victims of coerced debt. Lenders would then investigate and decide who owes the money.
The governor is weighing chapter amendments amid pushback from banks and debt collectors. Lawmakers said Hochul is considering changes that would increase protections for lenders, but would not disclose details of the ongoing discussions.
“I think they’re trying to get to a place where everyone is protected,” Rosenthal said. “My goal is to protect DV survivors and make their life easier, and I think that’s what this bill does. So I’m hopeful we’ll get there.”
Domestic violence groups are lobbying Hochul to sign the measure, arguing survivors shouldn’t pay debts they did not incur.
Her Justice Policy Director Rachel Braunstein said victims of economic abuse and coerced debt often carry a small burden of debt, which can be overwhelming and can delay leaving their abusers.
“They’re relatively small, they’re a few thousand dollars,” Braunstein told Spectrum News 1. “In the lives of survivors, those amounts are astronomical, but in the portfolio of lenders or creditors, the amounts are small…For creditors to have the opportunity to go after the right person for that debt is what this legislation does. We think it makes common sense.”
Banks and debt collectors are pushing Hochul to veto the bill and say its broad definition of economic abuse would fuel litigation.
Republicans voted against it, arguing it would make it too easy to commit fraud and increase consumer lending costs across the state.
Sen. George Borrello, a Republican from Sunset Bay, Chautauqua County, supports the intent of the bill, but said it would force lenders to write off debts that were not legitimately fraudulent.
“While the intent of this bill is laudable…the bill allows a private right of action to move forward with nothing more than a personal affidavit and an Federal Trade Commission identity theft form filled out,” Borrello said in a statement Monday. “This will make it far too easy for fraud to be committed. It also asks lending institutios to scrap their current fraud investigation protocols and replace them with an overly rigid and untried statutory procedure. This bill creates loopholes that may lead to a rash of illegitimate claims and excessive bad debt write-offs, which ultimately will cost consumers more and limit options. We see this far too often in Albany — legislation with good intentions that just goes too far and creates unintended consequences. The governor should not sign this bill.”
But Hochul’s support for survivors of domestic violence has been clear, and Rosenthal is hoping that support translates into support for the legislation. The assemblywoman said she’ll fight proposed changes that protect creditors over survivors until Hochul’s decision is made public.
The governor is reviewing the bill and does not typically discuss her thoughts on pending legislation.
“The governor does not tolerate abuse and DV… so I’m hopeful she will recognize the importance of this bill for DV survivors,” Rosenthal said. “I think it really behooves her to recognize the plight of DV survivors and help them move on.”
Gov. Hochul will make a decision by Dec. 31.