A bill is on the desk of Illinois Governor JB Pritzker that would allow victims of coerced debt to fill out a form that would be submitted to a collection agency and would then prohibit the agency from attempting to collect on the debt. The bill, House Bill 3352, would amend the Illinois Collection Agency Act to formally recognize “coerced debt” and outline a process for survivors of domestic violence, sexual assault, and human trafficking to assert that they are not liable for debts incurred through abuse, fraud, or manipulation.
🧾 Definition of Coerced Debt: The bill defines coerced debt as any consumer debt, other than debt secured by real property, incurred due to fraud, duress, intimidation, threats, force, or non-consensual use of personal identifying information, particularly in the context of familial or household abuse, or human trafficking.
📄 Submitting a Statement of Coerced Debt: To halt collection, a debtor must submit a written “statement of coerced debt” to the collection agency that includes:
- Enough information to identify the account,
- A description of how the debt was incurred,
- A preferred contact method,
- Supporting documentation (e.g., police report, court order, certified statement from a qualified third party), and
- A signed attestation confirming the abuse.
🕒 Agency Obligations: Once the statement is submitted:
- The agency has 10 days to cease collection efforts and notify credit bureaus of a dispute.
- Within 90 days, it must determine whether the debt qualifies as coerced debt.
- If the debt is found to be coerced, the agency must stop collecting and request the deletion of credit reporting data.
- If not, the agency must provide the consumer with a written explanation and supporting evidence.
🛡 Additional Protections
- A consumer can assert coerced debt as an affirmative defense in lawsuits or arbitrations.
- Courts must take protective measures to safeguard the identity and safety of survivors.
- Perpetrators of coerced debt can be held civilly liable to both the collection agency and the debtor.
- Agencies that fail to comply with the law could face damages of up to $2,500 per debt, plus legal costs.
📆 Next Steps: The bill passed both chambers with bipartisan support and is awaiting the governor’s signature. If signed, the Department of Financial and Professional Regulation will have 180 days to publish model forms for debtors and third parties.
