SB 975: Debt: coerced debts.
- Session Year: 2021-2022
- House: Senate
- Latest Version Date: 2022-09-30
Existing law regulates various practices related to debt, including its sale and collection. Existing law provides for various private rights of action, including for a patient against a psychotherapist for sexual contact, as defined and specified, a peace officer against an individual who has filed a false complaint with the officers employing agency, as specified, and a person against another for sexual harassment, as defined and specified.
This bill would require a claimant, upon receipt from the debtor of adequate documentation AND a sworn written statement that some or all of the debt being collected is coerced debt, to cease collection activities until the claimant completes a review, as defined and specified. The bill would also prohibit a person from causing another person to incur a coerced debt, and would make a person who causes another person to incur a coerced debt civilly liable to the claimant, as specified. The bill would also create a right of action that would allow a debtor to bring an action or file a cross-complaint against a claimant to establish that a particular debt, or portion thereof, is coerced debt, as specified. If a debtor establishes that a particular debt, or portion thereof, is coerced debt, the bill (1) would entitle that debtor to specified relief, including an injunction prohibiting the claimant from holding or attempting to hold the debtor personally liable on the particular debt, or portion thereof, that is coerced debt, or from enforcing a judgment related to the particular debt, or portion thereof, that is coerced debt against the debtor, and (2) would require the court to issue a judgment in favor of the claimant against any person who coerced the debtor into incurring the debt, as specified. The bill would apply only to debts incurred on or after July 1, 2023, except as specified. The bill would declare that its provisions are severable. The bill would define various terms for these purposes.
This bill would require a sworn written certification to be declared under penalty of perjury. By expanding the scope of a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law regulates various practices related to debt, including its sale and collection. Existing law provides for various private rights of action, including for a patient against a psychotherapist for sexual contact, as defined and specified, a peace officer against an individual who has filed a false complaint with the officers employing agency, as specified, and a person against another for sexual harassment, as defined and specified.
This bill would require a claimant, upon receipt from the debtor of adequate documentation AND a sworn written statement that some or all of the debt being collected is coerced debt, to cease collection activities until the claimant completes a review, as defined and specified. The bill would also prohibit a person from causing another person to incur a coerced debt, and would make a person who causes another person to incur a coerced debt civilly liable to the claimant, as specified. The bill would also create a right of action that would allow a debtor to bring an action or file a cross-complaint against a claimant to establish that a particular debt, or portion thereof, is coerced debt, as specified. If a debtor establishes that a particular debt, or portion thereof, is coerced debt, the bill (1) would entitle that debtor to specified relief, including an injunction prohibiting the claimant from holding or attempting to hold the debtor personally liable on the particular debt, or portion thereof, that is coerced debt, or from enforcing a judgment related to the particular debt, or portion thereof, that is coerced debt against the debtor, and (2) would require the court to issue a judgment in favor of the claimant against any person who coerced the debtor into incurring the debt, as specified. The bill would apply only to debts incurred on or after July 1, 2023, except as specified. The bill would declare that its provisions are severable. The bill would define various terms for these purposes.
This bill would require a sworn written certification to be declared under penalty of perjury. By expanding the scope of a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law regulates various practices related to debt, including its sale and collection. Existing law provides for various private rights of action, including for a patient against a psychotherapist for sexual contact, as defined and specified, a peace officer against an individual who has filed a false complaint with the officers employing agency, as specified, and a person against another for sexual harassment, as defined and specified.
This bill would require a claimant, upon receipt from the debtor of adequate documentation, a sworn written statement that some or all of the debt being collected is coerced debt, and other specified documentation, to cease collection activities until the claimant completes a review, as defined and specified. The bill would also prohibit a person from causing another person to incur a coerced debt, and would make a person who causes a debtor to incur a coerced debt civilly liable to the claimant, as specified. The bill would also create a right of action that would allow a debtor to bring an action or a claim against a claimant to establish that a particular debt, or portion thereof, is coerced debt, as specified. If a debtor establishes that a particular debt, or portion thereof, is coerced debt, the bill (1) would entitle that debtor to specified relief, including an injunction prohibiting the claimant from holding or attempting to hold the debtor personally liable on the particular debt, or portion thereof, that is coerced debt, or from enforcing a judgment related to the particular debt, or portion thereof, that is coerced debt against the debtor. debtor, and (2) would require the court to issue a judgment in favor of the claimant against any person who coerced the debtor into incurring the debt, as specified. The bill would apply only to debts incurred on or after January July 1, 2023, except as specified. The bill would declare that its provisions are severable.
This bill would require a sworn written certification to be declared under penalty of perjury. By expanding the scope of a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law regulates various practices related to debt, including its sale and collection. Existing law provides for various private rights of action, including for a patient against a psychotherapist for sexual contact, as defined and specified, a peace officer against an individual who has filed a false complaint with the officers employing agency, as specified, and a person against another for sexual harassment, as defined and specified.
This bill would require a claimant, upon receipt from the debtor of adequate documentation, a sworn written statement that some or all of the debt being collected is coerced debt, and other specified documentation, to cease collection activities until the claimant completes a review, as defined and specified. The bill would also create a right of action that would allow a debtor to bring an action or a claim against a claimant to establish that a particular debt, or portion thereof, is coerced debt, as specified. If a debtor establishes that a particular debt, or portion thereof, is coerced debt, the bill would entitle that debtor to specified relief, including an injunction prohibiting the claimant from holding or attempting to hold the debtor personally liable on the particular debt, or portion thereof, that is coerced debt, or from enforcing a judgment related to the particular debt, or portion thereof, that is coerced debt against the debtor. The bill would apply only to debts incurred on or after January 1, 2023, except as specified. The bill would declare that its provisions are severable.
This bill would require a sworn written certification to be declared under penalty of perjury. By expanding the scope of a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law regulates various practices related to debt, including its sale and collection. Existing law provides for various private rights of action, including for a patient against a psychotherapist for sexual contact, as defined and specified, a peace officer against an individual who has filed a false complaint with the officers employing agency, as specified, and a person against another for sexual harassment, as defined and specified.
This bill would require a claimant, upon receipt from the debtor of adequate documentation, a sworn written statement that some or all of the debt being collected is coerced debt, and other specified documentation, to cease collection activities until the claimant completes a review, as defined and specified. The bill would also create a right of action that would allow a debtor to bring an action or a claim against a claimant to establish that a particular debt, or portion thereof, is coerced debt, as specified. If a debtor establishes that a particular debt, or portion thereof, is coerced debt, the bill would entitle that debtor to specified relief, including an injunction prohibiting the claimant from holding or attempting to hold the debtor personally liable on the particular debt, or portion thereof, that is coerced debt, or from enforcing a judgment related to the particular debt, or portion thereof, that is coerced debt against the debtor. The bill would declare that its provisions are severable.
This bill would require a sworn written certification to be declared under penalty of perjury. By expanding the scope of a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law regulates various practices related to debt, including its sale and collection. Existing law provides for various private rights of action, including for a patient against a psychotherapist for sexual contact, as defined and specified, a peace officer against an individual who has filed a false complaint with the officers employing agency, as specified, and a person against another for sexual harassment, as defined and specified.
This bill would require a claimant, upon receipt from the debtor of adequate documentation, a sworn written statement that some or all of the debt being collected is a coerced debt, and other specified documentation, to cease collection activities until the claimant completes a review, as defined and specified. The bill would also create a right of action that would allow an alleged a debtor to bring an action or a claim against a claimant to establish that the claimants claim, a particular debt, or a portion thereof, arises from a is coerced debt, as specified. If an alleged a debtor establishes that a claim, particular debt, or a portion thereof, arises from a is coerced debt, the bill would entitle that alleged debtor to specified relief, including an injunction prohibiting the claimant from holding or attempting to hold the alleged debtor personally liable on the claim, particular debt, or the portion thereof thereof, that is established as having arisen from coerced debt, or from enforcing a judgment related to the claim particular debt, or portion thereof thereof, that is established as having arisen from coerced debt against the alleged debtor. The bill would require declare that its provisions are severable.
This bill would require a sworn written certification to be declared under penalty of perjury. By expanding the scope of a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law regulates various practices related to debt, including its sale and collection. Existing law provides for various private rights of action, including for a patient against a psychotherapist for sexual contact, as defined and specified, a peace officer against an individual who has filed a false complaint with the officers employing agency, as specified, and a person against another for sexual harassment, as defined and specified.
This bill would require a claimant, upon receipt from the debtor of adequate documentation, a sworn written statement that some or all of the debt being collected is a coerced debt, and other specified documentation, to cease collection activities until the claimant completes a review, as defined and specified. The bill would also create a right of action that would allow an alleged debtor to bring an action or a claim against an alleged creditor a claimant to establish that the alleged creditors claim claimants claim, or a portion thereof, arises from a coerced debt, as specified and defined. specified. If an alleged debtor establishes that a claim claim, or a portion thereof, arises from a coerced debt, the bill would entitle that alleged debtor to specified relief, including an injunction restraining prohibiting the creditor claimant from holding or attempting to hold the alleged debtor personally liable on the claim, or the portion thereof that is established as having arisen from coerced debt, or from enforcing a judgment related to the claim or portion thereof that is established as having arisen from coerced debt against the alleged debtor. The bill would require a sworn written certification to be declared under penalty of perjury. By expanding the scope of a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law regulates various practices related to debt, including its sale and collection. Existing law provides for various private rights of action, including for a patient against a psychotherapist for sexual contact, as defined and specified, a peace officer against an individual who has filed a false complaint with the officers employing agency, as specified, and a person against another for sexual harassment, as defined and specified.
This bill would create a right of action that would allow an alleged debtor to bring an action or a claim against an alleged creditor to establish that the alleged creditors claim arises from a coerced debt, as specified and defined. If an alleged debtor establishes that a claim arises from a coerced debt, the bill would entitle that alleged debtor to specified relief, including an injunction restraining the creditor from holding or attempting to hold the alleged debtor personally liable on the claim, or from enforcing a judgment related to the claim against the alleged debtor.
Existing law regulates various practices related to debt, including its sale and collection. Existing law provides for various private rights of action, including for a patient against a psychotherapist for sexual contact, as defined and specified, a peace officer against an individual who has filed a false complaint with the officers employing agency, as specified, and a person against another for sexual harassment, as defined and specified.
This bill would create a right of action that would allow an alleged debtor to bring an action or a claim against an alleged creditor to establish that the alleged creditors claim arises from a coerced debt, as specified and defined. If an alleged debtor establishes that a claim arises from a coerced debt, the bill would entitle that alleged debtor to specified relief, including an injunction restraining the creditor from holding or attempting to hold the alleged debtor personally liable on the claim, or from enforcing a judgment related to the claim against the alleged debtor.
Existing law regulates various practices related to debt, including its sale and collection. Existing law provides for various private rights of action, including for a patient against a psychotherapist for sexual contact, as defined and specified, a peace officer against an individual who has filed a false complaint with the officers employing agency, as specified, and a person against another for sexual harassment, as defined and specified.
This bill would create a right of action that would allow an alleged debtor to bring an action or a claim against an alleged creditor to establish that the alleged creditors claim arises from a coerced debt, as specified and defined. If an alleged debtor establishes that a claim arises from a coerced debt, the bill would entitle that alleged debtor to specified relief, including an injunction restraining the creditor from holding or attempting to hold the alleged debtor personally liable on the claim, or from enforcing a judgment related to the claim against the alleged debtor.
Existing law regulates various practices related to debt, including its sale and collection. Existing law provides for various private rights of action, including for a patient against a psychotherapist for sexual contact, as defined and specified, a peace officer against an individual who has filed a false complaint with the officers employing agency, as specified, and a person against another for sexual harassment, as defined and specified.
This bill would create a right of action that would allow an alleged debtor to bring an action or a claim against an alleged creditor to establish that the alleged creditors claim arises from a coerced debt, as specified and defined. If an alleged debtor establishes that a claim arises from a coerced debt, the bill would entitle that alleged debtor to specified relief, including an injunction restraining the creditor from holding or attempting to hold the alleged debtor personally liable on the claim, or from enforcing a judgment related to the claim against the alleged debtor.
The Legislature finds and declares all of the following:
(a)Economic abuse is a serious issue impacting survivors of domestic violence, survivors of elder or dependent adult abuse, and foster youth.
(b)Coerced or fraudulent debts, a common component of economic abuse, can ruin an individuals credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c)The debt and poor credit score resulting from economic abuse can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d)Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e)In cases of elder abuse, family members and other trusted individuals can use their powerful positions to commit this type of abuse and take out debts through coercion or fraud.
(f)Youth in foster care are particularly at risk for coercion because the lack of a stable adult presence in their life makes them more vulnerable to human trafficking, homelessness, and other abuse.
SEC. 2.Title 1.81.35 (commencing with Section 1798.97.1) is added to Part 4 of Division 3 of the Civil Code, to read:1.81.35.Coerced Debt1798.97.1.For purposes of this title, the following definitions apply:
(a)Adequate documentation means documentation that identifies a particular debt, or portion thereof, as coerced debt, describes the circumstances under which the coerced debt was incurred, and takes the form of any of the following:
(1)A police report.
(2)A Federal Trade Commission identity theft report identifying a particular debt, or portion thereof, as coerced, but not as identity theft.
(3)A court order issued pursuant to Section 6340 of the Family Code relating to domestic violence, Section 213.5 of the Welfare and Institutions Code relating to a dependent or ward of the juvenile court, or Section 15657.03 of the Welfare and Institutions Code relating to elder or dependent adult abuse.
(4)(A)A sworn written certification from a qualified third-party professional based on information they received while acting in a professional capacity.
(B)The documentation described by subparagraph (A) shall be signed by a qualified third-party professional and display the letterhead, address, and telephone number of the office, institution, center, or organization, as appropriate, that engages or employs, whether financially compensated or not, the qualified third-party professional, or, if the qualified third-party professional is self-employed, the documentation shall display the letterhead, address, and telephone number of the qualified third-party professional.
(b)Claim means a right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, or equitable.
(c)(1)Claimant means a person or an entity who has or purports to have a claim against a debtor arising from coerced debt, or that persons or entitys successor or assignee. Claimant includes, but is not limited to, a debt collector or a debt buyer.
(2)Notwithstanding paragraph (1), claimant shall not include a person who caused the claim described in paragraph (1) to arise through duress, intimidation, threat of force, force, fraud, or undue influence perpetrated against the debtor.
(d)Coerced debt means a particular debt, or portion thereof, for personal, family, or household use in the name of a debtor who is a victim of domestic violence, or a victim of elder or dependent adult abuse, or a person who is a foster youth, incurred as a result of duress, intimidation, threat of force, force, fraud, or undue influence.
(1)For purposes of this subdivision, domestic violence has the same meaning as in Section 6211 of the Family Code.
(2)For the purposes of this subdivision, foster youth has the same meaning as in Section 42238.01 of the Education Code.
(3)For the purposes of this subdivision, dependent adult has the same meaning as in Section 15610.23 of the Welfare and Institutions Code.
(4)For the purposes of this subdivision, elder has the same meaning as in Section 15610.27 of the Welfare and Institutions Code.
(e)Debtor means a person who owes or is otherwise liable for coerced debt.
(f)Fraud means an initial fraudulent act that is perpetrated against the debtor.
(g)Immediate family member has the same meaning as defined in paragraph (3) of subdivision (h) of Section 1946.7.
(h)Person means a natural person.
(i)Qualified third-party professional means any of the following:
(1)A domestic violence counselor, as defined in Section 1037.1 of the Evidence Code.
(2)A sexual assault counselor, as defined in Section 1035.2 of the Evidence Code.
(3)A Court-Appointed Special Advocate, as defined in Section 101 of the Welfare and Institutions Code.
(4)A court-appointed attorney, as defined in subdivision (e) of Section 317 of the Welfare and Institutions Code.
(5)A board certified psychiatrist or psychologist.
(6)A licensed marriage and family therapist.
(7)A licensed professional clinical counselor.
(8)A licensed clinical social worker.
(9)A social worker or caseworker employed by an adult protective service agency for the purposes described in Chapter 13 (commencing with Section 15750) of Part 3 of Division 9 of the Welfare and Institutions Code.
(10)A social worker who has completed the child welfare training program described in Article 2 (commencing with Section 16205) of Chapter 3 of Part 4 of Division 9 of the Welfare and Institutions Code.
(j)(1)Sworn written certification means a document in which the author declares under penalty of perjury as true any material fact, and which is accompanied by the following, to the extent that an item listed below is relevant to the debtors allegation that the debt is coerced debt:
(A)A copy of the debtors drivers license or identification card, as issued by the state.
(B)Any other identification document that supports the statement that the particular debt, or portion thereof, is coerced debt.
(C)An express statement that the debtor did not willingly authorize the use of the debtors name or personal information for incurring the coerced debt, and specific facts supporting the claim of coerced debt, if available, and, if not all of the debt was coerced, a statement identifying the portion thereof that was coerced.
(D)Any available correspondence disputing the coerced debt after transaction information has been provided to the debtor.
(E)Information, if known by the debtor, including, but not limited to, a credit card number or loan number, that can be used by the claimant to identify the account associated with the coerced debt and the person or persons in whose name the debt was incurred.
(F)The identity of the person or persons who coerced the debtor into incurring the debt and contact information for that person or persons, if known by the debtor, unless the debtor signs a sworn statement that disclosing this information is likely to result in abuse, as defined in Section 6203 of the Family Code, to the debtor or an immediate family member of the debtor.
(G)A telephone number for contacting the person signing the certification concerning any additional information or questions, or direction that further communications to the debtor be in writing only, with the mailing address specified in the statement.
(2)The certification required by this subdivision shall be sufficient if it is in substantially the following form:
I declare under penalty of perjury that the representations made herein are true, correct, and contain no material omissions of fact.
_______(Date and Place)________ _______(Signature)________
1798.97.2.(a)A person shall not cause another person to incur a coerced debt. A person who causes another person to incur a coerced debt in violation of this subdivision shall be civilly liable to the claimant for the amount of the debt, or portion thereof, determined by a court to be coerced debt, plus the claimants attorneys fees and costs.
(b)Upon receipt of both of the following, a claimant shall cease collection activities until completion of the review provided in subdivision (d):
(1)Adequate documentation.
(2)The debtors sworn written certification that a particular debt, or portion thereof, being collected is coerced debt.
(c)If a debtor notifies a claimant orally that a particular debt, or portion thereof, being collected is coerced debt, the claimant shall notify the debtor, orally or in writing, that the debtors notification must be in writing. If a debtor notifies a claimant in writing that a particular debt, or portion thereof, being collected is coerced debt, but omits information required by subdivision (b), and if the claimant does not cease collection activities, the claimant shall provide written notice to the debtor of the additional information that is required.
(d)(1)Within 10 business days of receiving the complete statement and information described in subdivision (b), the claimant shall, if the claimant furnished adverse information about the debtor to a consumer credit reporting agency, notify the consumer credit reporting agency that the account is disputed.
(2)The claimant shall initiate a review considering all of the information provided by the debtor and other information available to the claimant in its file.
(3)Within 10 business days of completing the review, the claimant shall notify the debtor in writing of the claimants determination and the good faith basis for that determination.
(4)The claimant shall not recommence collection activities until the debtor has been notified in writing of the good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(e)No inference or presumption that the debt is valid or invalid, or that the debtor is liable or not liable for the particular debt, or portion thereof, shall arise if the claimant decides after the review described in subdivision (d) to cease or recommence collection activities. The exercise or nonexercise of rights under this section is not a waiver of any other right or defense of the debtor or claimant.
(f)(1)At least 30 days before filing an action pursuant to paragraph (2) of subdivision (a) of Section 1798.97.3 or other action against a claimant in connection with an allegedly coerced debt, a debtor shall submit notice of the debtors intent to file an action against the claimant and documents that comply with subdivision (b) in writing to the claimant.
(2)The written notice described in paragraph (1) shall be sent by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date.
(3)The written notice described in paragraph (1) shall be sent to an address made available to the debtor by the claimant for receipt of the notice, or, if an address has not been identified by the claimant, to the claimants principal place of business as identified by the Secretary of State. If an address is unavailable through the Secretary of States website, the debtor may use the correspondence address of the claimant, or in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.
(4)(A)The debtor shall not commence an action described in subdivision (a) of Section 1798.97.3 or other action against a claimant in connection with an allegedly coerced debt if the claimant informs the debtor that it has ceased all efforts to collect on the particular debt, or portion thereof, identified in the written notice pursuant to paragraph (1) and the debtor receives written notice of this cessation before the expiration of the 30-day period.
(B)The debtor may commence an action described in subdivision (a) of Section 1798.97.3 or other action against a claimant in connection with an allegedly coerced debt if either of the following conditions is satisfied:
(i)The 30-day period described in paragraph (1) expires and the collection activities have not ceased or the debtor has not received written notice that collection activities have ceased.
(ii)The debtor receives written notice pursuant to paragraph (4) of subdivision (d) of the claimants good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(5)For purposes of this subdivision, the 30-day period shall begin to run when the claimant receives the written notice.
(g)A claimant that ceases collection activities under this section and does not recommence those collection activities shall do both of the following:
(1)If the claimant has furnished adverse information to a consumer credit reporting agency regarding the debtor and a particular debt, or portion thereof, notify the agency to delete that information no later than 10 business days after making its determination.
(2)If the claimant is a debt collector, notify the creditor no later than 10 business days after making its determination that collection activities have been terminated based upon the debtors assertion that a particular debt, or portion thereof, being collected is coerced debt.
(h)A claimant that has possession of documents that the debtor is entitled to request from a creditor pursuant to Section 530.8 of the Penal Code may provide those documents to the debtor.
1798.97.3.(a)(1)A debtor may bring an action against a claimant to establish that a particular debt, or portion thereof, is coerced debt.
(2)In an action brought by a claimant to recover a particular debt against the debtor, the debtor may file a cross-complaint to establish that the particular debt, or portion thereof, is coerced debt. The notice described in subdivision (f) of Section 1798.97.2 shall not be required as a prerequisite to filing a cross-complaint.
(3)A debtor shall plead the allegations of coerced debt with particularity and shall do either of the following:
(A)Attach the documents provided to the claimant pursuant to subdivision (b) of Section 1798.97.2 to any complaint.
(B)Attach the documents identified in subdivision (b) of Section 1798.97.2 to any cross-complaint.
(b)If the debtor establishes by a preponderance of the evidence in an action described in subdivision (a) that the particular debt, or portion thereof, is coerced debt, the debtor shall be entitled to the following relief:
(1)A declaratory judgment that the debtor is not obligated to the claimant on the particular debt, or portion thereof, that is coerced debt.
(2)An injunction prohibiting the claimant from holding or attempting to hold the debtor personally liable on the particular debt, or portion thereof, that is coerced debt, and prohibiting the claimant from enforcing a judgment related to the particular debt, or portion thereof, that is coerced debt against the debtor.
(3)An order dismissing any cause of action brought by the claimant to enforce or collect on the particular debt from the debtor or, if only a portion of the debt is established as coerced debt, an order directing that the complaint and judgment, if any, in the action be amended to reflect only the portion of the particular debt that is not coerced debt.
(c)(1)If the debtor establishes by a preponderance of the evidence in an action described in subdivision (a) that the particular debt, or portion thereof, is coerced debt, the court shall issue a judgment in favor of the claimant against the person or persons who coerced the debtor into incurring the debt in the amount of the debt, or portion thereof, that is coerced debt, provided that the person or persons who coerced the debtor into incurring the debt or debts has been brought within the jurisdiction of the court and joined as a party to the action and the evidence supports such a judgment.
(2)The court presiding over the action shall take appropriate steps necessary to prevent abuse, as defined in Section 6203 of the Family Code, of the debtor or an immediate family member of the debtor, including, but not limited to, sealing court records, redacting personally identifiable information about the debtor and any immediate family member of the debtor, and directing that any deposition or evidentiary hearing be conducted remotely.
(d)A debtor who files knowingly false motions, pleadings, or other papers or engages in other tactics that are frivolous or intended to cause unnecessary delay against a claimant shall be liable for the claimants attorneys fees and costs in defending the lawsuit.
(e)The claimant may move the court to make written findings regarding evidence related to the person who caused the coerced debt to be incurred.
(f)Where some or all of a claim is established as having arisen from coerced debt, a claimant shall have standing, and may use all rights and remedies, to collect by any lawful means that claim, or portion thereof, from the person or persons determined to have coerced the debt, or against a person who used or possessed money, goods, services, or property obtained through coerced debt.
(g)The statute of limitations for a claimant to bring an action to collect coerced debt from any person determined to have coerced the debt shall run from the date of the courts determination that the person caused the duress, intimidation, threat of force, force, fraud, or undue influence giving rise to the coerced debt at issue and shall be brought within five years of that determination.
1798.97.4.(a)This title does not apply to secured debts.
(b)This title does not require a court to order a claimant to refund any moneys already paid on a debt that is determined to be coerced.
(c)This title does not diminish the rights of a claimant to recover payment for a coerced debt from the person or persons who coerced a debtor into incurring that debt.
(d)This title does not reduce or eliminate any other rights or defenses available to a debtor or claimant pursuant to any other law.
1798.97.5.(a)Except as set forth in subdivision (b), this title applies only to debts incurred on or after July 1, 2023.
(b)Notwithstanding subdivision (a), a debtor may file a cross-complaint described by paragraph (2) of subdivision (a) of Section 1798.97.3 in an action filed by a claimant to collect a debt incurred prior to July 1, 2023, in which case, this title applies to that action, unless a final judgment has been entered in that action.
1798.97.6.If any provision of this title or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this title that can be given effect without the invalid provision or application, and to this end the provisions of this title are severable.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares all of the following:
(a)Economic abuse is a serious issue impacting survivors of domestic violence, survivors of elder or dependent adult abuse, and foster youth.
(b)Coerced or fraudulent debts, a common component of economic abuse, can ruin an individuals credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c)The debt and poor credit score resulting from economic abuse can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d)Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e)In cases of elder abuse, family members and other trusted individuals can use their powerful positions to commit this type of abuse and take out debts through coercion or fraud.
(f)Youth in foster care are particularly at risk for coercion because the lack of a stable adult presence in their life makes them more vulnerable to human trafficking, homelessness, and other abuse.
SEC. 2.Title 1.81.35 (commencing with Section 1798.97.1) is added to Part 4 of Division 3 of the Civil Code, to read:1.81.35.Coerced Debt1798.97.1.For purposes of this title, the following definitions apply:
(a)Adequate documentation means documentation that identifies a particular debt, or portion thereof, as coerced debt, describes the circumstances under which the coerced debt was incurred, and takes the form of any of the following:
(1)A police report.
(2)A Federal Trade Commission identity theft report identifying a particular debt, or portion thereof, as coerced, but not as identity theft.
(3)A court order issued pursuant to Section 6340 of the Family Code relating to domestic violence, Section 213.5 of the Welfare and Institutions Code relating to a dependent or ward of the juvenile court, or Section 15657.03 of the Welfare and Institutions Code relating to elder or dependent adult abuse.
(4)(A)A sworn written certification from a qualified third-party professional based on information they received while acting in a professional capacity.
(B)The documentation described by subparagraph (A) shall be signed by a qualified third-party professional and display the letterhead, address, and telephone number of the office, institution, center, or organization, as appropriate, that engages or employs, whether financially compensated or not, the qualified third-party professional, or, if the qualified third-party professional is self-employed, the documentation shall display the letterhead, address, and telephone number of the qualified third-party professional.
(b)Claim means a right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, or equitable.
(c)(1)Claimant means a person or an entity who has or purports to have a claim against a debtor arising from coerced debt, or that persons or entitys successor or assignee. Claimant includes, but is not limited to, a debt collector or a debt buyer.
(2)Notwithstanding paragraph (1), claimant shall not include a person who caused the claim described in paragraph (1) to arise through duress, intimidation, threat of force, force, fraud, or undue influence perpetrated against the debtor.
(d)Coerced debt means a particular debt, or portion thereof, for personal, family, or household use in the name of a debtor who is a victim of domestic violence, or a victim of elder or dependent adult abuse, or a person who is a foster youth, incurred as a result of duress, intimidation, threat of force, force, fraud, or undue influence.
(1)For purposes of this subdivision, domestic violence has the same meaning as in Section 6211 of the Family Code.
(2)For the purposes of this subdivision, foster youth has the same meaning as in Section 42238.01 of the Education Code.
(3)For the purposes of this subdivision, dependent adult has the same meaning as in Section 15610.23 of the Welfare and Institutions Code.
(4)For the purposes of this subdivision, elder has the same meaning as in Section 15610.27 of the Welfare and Institutions Code.
(e)Debtor means a person who owes or is otherwise liable for coerced debt.
(f)Fraud means an initial fraudulent act that is perpetrated against the debtor.
(g)Immediate family member has the same meaning as defined in paragraph (3) of subdivision (h) of Section 1946.7.
(h)Person means a natural person.
(i)Qualified third-party professional means any of the following:
(1)A domestic violence counselor, as defined in Section 1037.1 of the Evidence Code.
(2)A sexual assault counselor, as defined in Section 1035.2 of the Evidence Code.
(3)A Court-Appointed Special Advocate, as defined in Section 101 of the Welfare and Institutions Code.
(4)A court-appointed attorney, as defined in subdivision (e) of Section 317 of the Welfare and Institutions Code.
(5)A board certified psychiatrist or psychologist.
(6)A licensed marriage and family therapist.
(7)A licensed professional clinical counselor.
(8)A licensed clinical social worker.
(9)A social worker or caseworker employed by an adult protective service agency for the purposes described in Chapter 13 (commencing with Section 15750) of Part 3 of Division 9 of the Welfare and Institutions Code.
(10)A social worker who has completed the child welfare training program described in Article 2 (commencing with Section 16205) of Chapter 3 of Part 4 of Division 9 of the Welfare and Institutions Code.
(j)(1)Sworn written certification means a document in which the author declares under penalty of perjury as true any material fact, and which is accompanied by the following, to the extent that an item listed below is relevant to the debtors allegation that the debt is coerced debt:
(A)A copy of the debtors drivers license or identification card, as issued by the state.
(B)Any other identification document that supports the statement that the particular debt, or portion thereof, is coerced debt.
(C)An express statement that the debtor did not willingly authorize the use of the debtors name or personal information for incurring the coerced debt, and specific facts supporting the claim of coerced debt, if available, and, if not all of the debt was coerced, a statement identifying the portion thereof that was coerced.
(D)Any available correspondence disputing the coerced debt after transaction information has been provided to the debtor.
(E)Information, if known by the debtor, including, but not limited to, a credit card number or loan number, that can be used by the claimant to identify the account associated with the coerced debt and the person or persons in whose name the debt was incurred.
(F)The identity of the person or persons who coerced the debtor into incurring the debt and contact information for that person or persons, if known by the debtor, unless the debtor signs a sworn statement that disclosing this information is likely to result in abuse, as defined in Section 6203 of the Family Code, to the debtor or an immediate family member of the debtor.
(G)A telephone number for contacting the person signing the certification concerning any additional information or questions, or direction that further communications to the debtor be in writing only, with the mailing address specified in the statement.
(2)The certification required by this subdivision shall be sufficient if it is in substantially the following form:
I declare under penalty of perjury that the representations made herein are true, correct, and contain no material omissions of fact.
_______(Date and Place)________ _______(Signature)________
1798.97.2.(a)A person shall not cause another person to incur a coerced debt. A person who causes another person to incur a coerced debt in violation of this subdivision shall be civilly liable to the claimant for the amount of the debt, or portion thereof, determined by a court to be coerced debt, plus the claimants attorneys fees and costs.
(b)Upon receipt of both of the following, a claimant shall cease collection activities until completion of the review provided in subdivision (d):
(1)Adequate documentation.
(2)The debtors sworn written certification that a particular debt, or portion thereof, being collected is coerced debt.
(c)If a debtor notifies a claimant orally that a particular debt, or portion thereof, being collected is coerced debt, the claimant shall notify the debtor, orally or in writing, that the debtors notification must be in writing. If a debtor notifies a claimant in writing that a particular debt, or portion thereof, being collected is coerced debt, but omits information required by subdivision (b), and if the claimant does not cease collection activities, the claimant shall provide written notice to the debtor of the additional information that is required.
(d)(1)Within 10 business days of receiving the complete statement and information described in subdivision (b), the claimant shall, if the claimant furnished adverse information about the debtor to a consumer credit reporting agency, notify the consumer credit reporting agency that the account is disputed.
(2)The claimant shall initiate a review considering all of the information provided by the debtor and other information available to the claimant in its file.
(3)Within 10 business days of completing the review, the claimant shall notify the debtor in writing of the claimants determination and the good faith basis for that determination.
(4)The claimant shall not recommence collection activities until the debtor has been notified in writing of the good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(e)No inference or presumption that the debt is valid or invalid, or that the debtor is liable or not liable for the particular debt, or portion thereof, shall arise if the claimant decides after the review described in subdivision (d) to cease or recommence collection activities. The exercise or nonexercise of rights under this section is not a waiver of any other right or defense of the debtor or claimant.
(f)(1)At least 30 days before filing an action pursuant to paragraph (2) of subdivision (a) of Section 1798.97.3 or other action against a claimant in connection with an allegedly coerced debt, a debtor shall submit notice of the debtors intent to file an action against the claimant and documents that comply with subdivision (b) in writing to the claimant.
(2)The written notice described in paragraph (1) shall be sent by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date.
(3)The written notice described in paragraph (1) shall be sent to an address made available to the debtor by the claimant for receipt of the notice, or, if an address has not been identified by the claimant, to the claimants principal place of business as identified by the Secretary of State. If an address is unavailable through the Secretary of States website, the debtor may use the correspondence address of the claimant, or in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.
(4)(A)The debtor shall not commence an action described in subdivision (a) of Section 1798.97.3 or other action against a claimant in connection with an allegedly coerced debt if the claimant informs the debtor that it has ceased all efforts to collect on the particular debt, or portion thereof, identified in the written notice pursuant to paragraph (1) and the debtor receives written notice of this cessation before the expiration of the 30-day period.
(B)The debtor may commence an action described in subdivision (a) of Section 1798.97.3 or other action against a claimant in connection with an allegedly coerced debt if either of the following conditions is satisfied:
(i)The 30-day period described in paragraph (1) expires and the collection activities have not ceased or the debtor has not received written notice that collection activities have ceased.
(ii)The debtor receives written notice pursuant to paragraph (4) of subdivision (d) of the claimants good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(5)For purposes of this subdivision, the 30-day period shall begin to run when the claimant receives the written notice.
(g)A claimant that ceases collection activities under this section and does not recommence those collection activities shall do both of the following:
(1)If the claimant has furnished adverse information to a consumer credit reporting agency regarding the debtor and a particular debt, or portion thereof, notify the agency to delete that information no later than 10 business days after making its determination.
(2)If the claimant is a debt collector, notify the creditor no later than 10 business days after making its determination that collection activities have been terminated based upon the debtors assertion that a particular debt, or portion thereof, being collected is coerced debt.
(h)A claimant that has possession of documents that the debtor is entitled to request from a creditor pursuant to Section 530.8 of the Penal Code may provide those documents to the debtor.
1798.97.3.(a)(1)A debtor may bring an action against a claimant to establish that a particular debt, or portion thereof, is coerced debt.
(2)In an action brought by a claimant to recover a particular debt against the debtor, the debtor may file a cross-complaint to establish that the particular debt, or portion thereof, is coerced debt. The notice described in subdivision (f) of Section 1798.97.2 shall not be required as a prerequisite to filing a cross-complaint.
(3)A debtor shall plead the allegations of coerced debt with particularity and shall do either of the following:
(A)Attach the documents provided to the claimant pursuant to subdivision (b) of Section 1798.97.2 to any complaint.
(B)Attach the documents identified in subdivision (b) of Section 1798.97.2 to any cross-complaint.
(b)If the debtor establishes by a preponderance of the evidence in an action described in subdivision (a) that the particular debt, or portion thereof, is coerced debt, the debtor shall be entitled to the following relief:
(1)A declaratory judgment that the debtor is not obligated to the claimant on the particular debt, or portion thereof, that is coerced debt.
(2)An injunction prohibiting the claimant from holding or attempting to hold the debtor personally liable on the particular debt, or portion thereof, that is coerced debt, and prohibiting the claimant from enforcing a judgment related to the particular debt, or portion thereof, that is coerced debt against the debtor.
(3)An order dismissing any cause of action brought by the claimant to enforce or collect on the particular debt from the debtor or, if only a portion of the debt is established as coerced debt, an order directing that the complaint and judgment, if any, in the action be amended to reflect only the portion of the particular debt that is not coerced debt.
(c)(1)If the debtor establishes by a preponderance of the evidence in an action described in subdivision (a) that the particular debt, or portion thereof, is coerced debt, the court shall issue a judgment in favor of the claimant against the person or persons who coerced the debtor into incurring the debt in the amount of the debt, or portion thereof, that is coerced debt, provided that the person or persons who coerced the debtor into incurring the debt or debts has been brought within the jurisdiction of the court and joined as a party to the action and the evidence supports such a judgment.
(2)The court presiding over the action shall take appropriate steps necessary to prevent abuse, as defined in Section 6203 of the Family Code, of the debtor or an immediate family member of the debtor, including, but not limited to, sealing court records, redacting personally identifiable information about the debtor and any immediate family member of the debtor, and directing that any deposition or evidentiary hearing be conducted remotely.
(d)A debtor who files knowingly false motions, pleadings, or other papers or engages in other tactics that are frivolous or intended to cause unnecessary delay against a claimant shall be liable for the claimants attorneys fees and costs in defending the lawsuit.
(e)The claimant may move the court to make written findings regarding evidence related to the person who caused the coerced debt to be incurred.
(f)Where some or all of a claim is established as having arisen from coerced debt, a claimant shall have standing, and may use all rights and remedies, to collect by any lawful means that claim, or portion thereof, from the person or persons determined to have coerced the debt, or against a person who used or possessed money, goods, services, or property obtained through coerced debt.
(g)The statute of limitations for a claimant to bring an action to collect coerced debt from any person determined to have coerced the debt shall run from the date of the courts determination that the person caused the duress, intimidation, threat of force, force, fraud, or undue influence giving rise to the coerced debt at issue and shall be brought within five years of that determination.
1798.97.4.(a)This title does not apply to secured debts.
(b)This title does not require a court to order a claimant to refund any moneys already paid on a debt that is determined to be coerced.
(c)This title does not diminish the rights of a claimant to recover payment for a coerced debt from the person or persons who coerced a debtor into incurring that debt.
(d)This title does not reduce or eliminate any other rights or defenses available to a debtor or claimant pursuant to any other law.
1798.97.5.(a)Except as set forth in subdivision (b), this title applies only to debts incurred on or after July 1, 2023.
(b)Notwithstanding subdivision (a), a debtor may file a cross-complaint described by paragraph (2) of subdivision (a) of Section 1798.97.3 in an action filed by a claimant to collect a debt incurred prior to July 1, 2023, in which case, this title applies to that action, unless a final judgment has been entered in that action.
1798.97.6.If any provision of this title or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this title that can be given effect without the invalid provision or application, and to this end the provisions of this title are severable.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares all of the following:
(a)Economic abuse is a serious issue impacting survivors of domestic violence, survivors of elder or dependent adult abuse, and foster youth.
(b)Coerced or fraudulent debts, a common component of economic abuse, can ruin an individuals credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c)The debt and poor credit score resulting from economic abuse can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d)Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e)In cases of elder abuse, family members and other trusted individuals can use their powerful positions to commit this type of abuse and take out debts through coercion or fraud.
(f)Youth in foster care are particularly at risk for coercion because the lack of a stable adult presence in their life makes them more vulnerable to human trafficking, homelessness, and other abuse.
SEC. 2.Title 1.81.35 (commencing with Section 1798.97.1) is added to Part 4 of Division 3 of the Civil Code, to read:1.81.35.Coerced Debt1798.97.1.For purposes of this title, the following definitions apply:
(a)Adequate documentation means documentation that identifies a particular debt, or portion thereof, as coerced debt, describes the circumstances under which the coerced debt was incurred, and takes the form of any of the following:
(1)A police report.
(2)A Federal Trade Commission identity theft report identifying a particular debt, or portion thereof, as coerced, but not as identity theft.
(3)A court order issued pursuant to Section 6340 of the Family Code relating to domestic violence, Section 213.5 of the Welfare and Institutions Code relating to a dependent or ward of the juvenile court, or Section 15657.03 of the Welfare and Institutions Code relating to elder or dependent adult abuse.
(4)(A)A sworn written certification from a qualified third-party professional based on information they received while acting in a professional capacity.
(B)The documentation described by subparagraph (A) shall be signed by a qualified third-party professional and display the letterhead, address, and telephone number of the office, institution, center, or organization, as appropriate, that engages or employs, whether financially compensated or not, the qualified third-party professional, or, if the qualified third-party professional is self-employed, the documentation shall display the letterhead, address, and telephone number of the qualified third-party professional.
(b)Claim means a right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, or equitable.
(c)(1)Claimant means a person or an entity who has or purports to have a claim against a debtor arising from coerced debt, or that persons or entitys successor or assignee. Claimant includes, but is not limited to, a debt collector or a debt buyer.
(2)Notwithstanding paragraph (1), claimant shall not include a person who caused the claim described in paragraph (1) to arise through duress duress, intimidation, threat of force, force, fraud, or undue influence perpetrated against the debtor.
(d)Coerced debt means a particular debt, or portion thereof, for personal, family, or household use in the name of a debtor who is a victim of domestic violence, or a victim of elder or dependent adult abuse, or a person who is a foster youth, incurred as a result of duress duress, intimidation, threat of force, force, fraud, or undue influence.
(1)For purposes of this subdivision, domestic violence has the same meaning as in Section 6211 of the Family Code.
(2)For the purposes of this subdivision, foster youth has the same meaning as in Section 42238.01 of the Education Code.
(3)For the purposes of this subdivision, dependent adult has the same meaning as in Section 15610.23 of the Welfare and Institutions Code.
(4)For the purposes of this subdivision, elder has the same meaning as in Section 15610.27 of the Welfare and Institutions Code.
(e)Debtor means a person who owes or is otherwise liable for coerced debt.
(f)Fraud means an initial fraudulent act that is perpetrated against the debtor.
(f)(g)Immediate family member has the same meaning as defined in paragraph (3) of subdivision (h) of Section 1946.7.
(g)(h)Person means a natural person.
(h)(i)Qualified third-party professional means any of the following:
(1)A domestic violence counselor, as defined in Section 1037.1 of the Evidence Code.
(2)A sexual assault counselor, as defined in Section 1035.2 of the Evidence Code.
(3)A Court-Appointed Special Advocate, as defined in Section 101 of the Welfare and Institutions Code.
(4)A court-appointed attorney, as defined in subdivision (e) of Section 317 of the Welfare and Institutions Code.
(5)A board certified psychiatrist or psychologist.
(6)A licensed marriage and family therapist.
(7)A licensed professional clinical counselor.
(8)A licensed clinical social worker.
(9)A social worker or caseworker employed by an adult protective service agency for the purposes described in Chapter 13 (commencing with Section 15750) of Part 3 of Division 9 of the Welfare and Institutions Code.
(10)A social worker who has completed the child welfare training program described in Article 2 (commencing with Section 16205) of Chapter 3 of Part 4 of Division 9 of the Welfare and Institutions Code.
(i)(j)(1)Sworn written certification means a document in which the author declares under penalty of perjury as true any material fact, and which is accompanied by the following, to the extent that an item listed below is relevant to the debtors allegation that the debt is coerced debt:
(A)A copy of the debtors drivers license or identification card, as issued by the state.
(B)Any other identification document that supports the statement that the particular debt, or portion thereof, is coerced debt.
(C)An express statement that the debtor did not willingly authorize the use of the debtors name or personal information for incurring the coerced debt, and specific facts supporting the claim of coerced debt, if available, and, if not all of the debt was coerced, a statement identifying the portion thereof that was coerced.
(D)Any available correspondence disputing the coerced debt after transaction information has been provided to the debtor.
(E)Information, if known by the debtor, including, but not limited to, a credit card number or loan number, that can be used by the claimant to identify the account associated with the coerced debt and the person or persons in whose name the debt was incurred.
(F)The identity of the person or persons who coerced the debtor into incurring the debt and contact information for that person or persons, if known by the debtor, unless the debtor signs a sworn statement that disclosing this information is likely to result in abuse, as defined in Section 6203 of the Family Code, to the debtor or an immediate family member of the debtor.
(G)A telephone number for contacting the person signing the certification concerning any additional information or questions, or direction that further communications to the debtor be in writing only, with the mailing address specified in the statement.
(2)The certification required by this subdivision shall be sufficient if it is in substantially the following form:
I declare under penalty of perjury that the representations made herein are true, correct, and contain no material omissions of fact.
_______(Date and Place)________ _______(Signature)________
1798.97.2.(a)Upon1798.97.2.(a)A person shall not cause another person to incur a coerced debt. A person who causes another person to incur a coerced debt in violation of this subdivision shall be civilly liable to the claimant for the amount of the debt, or portion thereof, determined by a court to be coerced debt, plus the claimants attorneys fees and costs.
(b)Upon receipt of both of the following, a claimant shall cease collection activities until completion of the review provided in subdivision (c): (d):
(1)Adequate documentation.
(2)The debtors sworn written certification that a particular debt, or portion thereof, being collected is coerced debt.
(b)(c)If a debtor notifies a claimant orally that a particular debt, or portion thereof, being collected is coerced debt, the claimant shall notify the debtor, orally or in writing, that the debtors notification must be in writing. If a debtor notifies a claimant in writing that a particular debt, or portion thereof, being collected is coerced debt, but omits information required by subdivision (a), (b), and if the claimant does not cease collection activities, the claimant shall provide written notice to the debtor of the additional information that is required.
(c)(d)(1)Within 10 business days of receiving the complete statement and information described in subdivision (a), (b), the claimant shall, if the claimant furnished adverse information about the debtor to a consumer credit reporting agency, notify the consumer credit reporting agency that the account is disputed.
(2)The claimant shall initiate a review considering all of the information provided by the debtor and other information available to the claimant in its file.
(3)Within 10 business days of completing the review, the claimant shall notify the debtor in writing of the claimants determination and the good faith basis for that determination.
(4)The claimant shall not recommence collection activities until the debtor has been notified in writing of the good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(d)(e)No inference or presumption that the debt is valid or invalid, or that the debtor is liable or not liable for the particular debt, or portion thereof, shall arise if the claimant decides after the review described in subdivision (c) (d) to cease or recommence collection activities. The exercise or nonexercise of rights under this section is not a waiver of any other right or defense of the debtor or claimant.
(e)(f)(1)At least 30 days before filing an action pursuant to paragraph (2) of subdivision (a) of Section 1798.97.3 or other judicial action against a claimant in connection with an allegedly coerced debt, a debtor shall submit notice of the debtors intent to file an action against the claimant and documents that comply with subdivision (a) (b) in writing to the claimant.
(2)The written notice described in paragraph (1) shall be sent by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date.
(3)The written notice described in paragraph (1) shall be sent to an address made available to the debtor by the claimant for receipt of the notice, or, if an address has not been identified by the claimant, to the claimants principal place of business as identified by the Secretary of State. If an address is unavailable through the Secretary of States website, the debtor may use the correspondence address of the claimant, or in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.
(4)(A)The debtor shall not commence an action described in subdivision (a) of Section 1798.97.3 or other judicial action against a claimant in connection with an allegedly coerced debt if the claimant informs the debtor that it has ceased all efforts to collect on the particular debt, or portion thereof, identified in the written notice pursuant to paragraph (2) of subdivision (f) (1) and the debtor receives written notice of this cessation before the expiration of the 30-day period.
(B)The debtor may commence an action described in subdivision (a) of Section 1798.97.3 or other judicial action against a claimant in connection with an allegedly coerced debt if either of the following conditions is satisfied:
(i)The 30-day period described in paragraph (1) expires and the collection activities have not ceased or the debtor has not received written notice that collection activities have ceased.
(ii)The debtor receives written notice pursuant to paragraph (4) of subdivision (c) (d) of the claimants good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(5)For purposes of this subdivision, the 30-day period shall begin to run when the claimant receives the written notice.
(f)(g)A claimant that ceases collection activities under this section and does not recommence those collection activities shall do both of the following:
(1)If the claimant has furnished adverse information to a consumer credit reporting agency regarding the debtor and a particular debt, or portion thereof, notify the agency to delete that information no later than 10 business days after making its determination.
(2)If the claimant is a debt collector, notify the creditor no later than 10 business days after making its determination that collection activities have been terminated based upon the debtors assertion that a particular debt, or portion thereof, being collected is coerced debt.
(g)(h)A claimant that has possession of documents that the debtor is entitled to request from a creditor pursuant to Section 530.8 of the Penal Code may provide those documents to the debtor.
1798.97.3.(a)(1)A debtor may bring an action against a claimant to establish that a particular debt, or portion thereof, is coerced debt.
(2)In an action brought by a claimant to recover a particular debt against the debtor, the debtor may file a cross-complaint to establish that the particular debt, or portion thereof, is coerced debt. The notice described in subdivision (e) (f) of Section 1798.97.2 shall not be required as a prerequisite to filing a cross-complaint.
(3)A debtor shall plead the allegations of coerced debt with particularity and shall, at a minimum, attach the documents provided to the claimant pursuant to subdivision (a) of Section 1798.97.2 to the complaint or cross-complaint. shall do either of the following:
(A)Attach the documents provided to the claimant pursuant to subdivision (b) of Section 1798.97.2 to any complaint.
(B)Attach the documents identified in subdivision (b) of Section 1798.97.2 to any cross-complaint.
(b)If the debtor establishes by a preponderance of the evidence in an action described in subdivision (a) that the particular debt, or portion thereof, is coerced debt, the debtor shall be entitled to the following relief:
(1)A declaratory judgment that the debtor is not obligated to the claimant on the particular debt, or portion thereof, that is coerced debt.
(2)An injunction prohibiting the claimant from holding or attempting to hold the debtor personally liable on the particular debt, or portion thereof, that is coerced debt, and prohibiting the claimant from enforcing a judgment related to the particular debt, or portion thereof, that is coerced debt against the debtor.
(3)An order dismissing any cause of action brought by the claimant to enforce or collect on the particular debt from the debtor or, if only a portion of the debt is established as coerced debt, an order directing that the complaint and judgment, if any, in the action be amended to reflect only the portion of the particular debt that is not coerced debt.
(c)(1)If the debtor establishes by a preponderance of the evidence in an action described in subdivision (a) that the particular debt, or portion thereof, is coerced debt, the court shall issue a judgment in favor of the claimant against the person or persons who coerced the debtor into incurring the debt in the amount of the debt, or portion thereof, that is coerced debt, provided that the person or persons who coerced the debtor into incurring the debt or debts has been brought within the jurisdiction of the court and joined as a party to the action and the evidence supports such a judgment.
(2)The court presiding over the action shall take appropriate steps necessary to prevent abuse, as defined in Section 6203 of the Family Code, of the debtor or an immediate family member of the debtor, including, but not limited to, sealing court records, redacting personally identifiable information about the debtor and any immediate family member of the debtor, and directing that any deposition or evidentiary hearing be conducted remotely.
(c)(d)A debtor who files knowingly false motions, pleadings, or other papers or engages in other tactics that are frivolous or intended to cause unnecessary delay against a claimant shall be liable for the claimants attorneys fees and costs in defending the lawsuit.
(d)(e)The claimant may move the court to make written findings regarding evidence related to the person who caused the coerced debt to be incurred.
(e)(f)Where some or all of a claim is established as having arisen from coerced debt, a claimant shall have standing, and may use all rights and remedies, to collect by any lawful means that claim, or portion thereof, from the person or persons determined to have coerced the debt, or against a person who used or possessed money, goods, services, or property obtained through coerced debt.
(f)(g)The statute of limitations for a claimant to bring an action to collect coerced debt from any person determined to have coerced the debt shall run from the date of the courts determination that the person caused the duress, intimidation, threat, threat of force, force, or fraud fraud, or undue influence giving rise to the coerced debt at issue and shall be brought within five years of that determination.
1798.97.4.(a)This title does not apply to secured debts.
(b)This title does not require a court to order a claimant to refund any moneys already paid on a debt that is determined to be coerced.
(b)(c)This title does not diminish the rights of a claimant to recover payment for a coerced debt from the person or persons who coerced a debtor into incurring that debt.
(c)(d)This title does not reduce or eliminate any other rights or defenses available to a debtor or claimant pursuant to any other law.
1798.97.5.(a)Except as set forth in subdivision (b), this title applies only to debts incurred on or after January July 1, 2023.
(b)Notwithstanding subdivision (a), a debtor may file a cross-complaint described by paragraph (2) of subdivision (a) of Section 1798.97.3 in an action filed by a claimant to collect a debt incurred prior to January July 1, 2023, in which case, this title applies to that action, unless a final judgment has been entered in that action.
1798.97.6.If any provision of this title or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this title that can be given effect without the invalid provision or application, and to this end the provisions of this title are severable.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares all of the following:
(a)Economic abuse is a serious issue impacting survivors of domestic violence, survivors of elder or dependent adult abuse, and foster youth.
(b)Coerced or fraudulent debts, a common component of economic abuse, can ruin an individuals credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c)The debt and poor credit score resulting from economic abuse can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d)Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e)In cases of elder abuse, family members and other trusted individuals can use their powerful positions to commit this type of abuse and take out debts through coercion or fraud.
(f)Youth in foster care are particularly vulnerable because they may have multiple placements that give many adults access to their personal information. at risk for coercion because the lack of a stable adult presence in their life makes them more vulnerable to human trafficking, homelessness, and other abuse.
SEC. 2.Title 1.81.35 (commencing with Section 1798.97.1) is added to Part 4 of Division 3 of the Civil Code, to read:1.81.35.Coerced Debt1798.97.1.For purposes of this title, the following definitions apply:
(a)Adequate documentation means documentation that identifies a particular debt, or portion thereof, as coerced debt, describes the circumstances under which the coerced debt was incurred, and includes the identity of any person alleged to have caused the coerced debt. The debtor shall not be required to disclose the identity of any person alleged to have caused coerced debt if they provide a sworn statement that disclosure would compromise their safety or the safety of their loved ones. Adequate documentation means takes the form of any of the following:
(1)A police report identifying a particular debt, or portion thereof, as coerced debt. report.
(2)A Federal Trade Commission identity theft report identifying a particular debt, or portion thereof, as coerced debt. coerced, but not as identity theft.
(3)A court order issued pursuant to Section 6340 of the Family Code relating to domestic violence, Section 213.5 of the Welfare and Institutions Code relating to a dependent or ward of the juvenile court, or Section 15657.03 of the Welfare and Institutions Code relating to elder or dependent abuse identifying a particular debt, or portion thereof, as coerced debt. abuse.
(4)(A)A sworn written certification from a qualified third-party professional based on information they received while acting in a professional capacity identifying a particular debt, or portion thereof, as coerced debt. capacity.
(B)The documentation described by subparagraph (A) shall be signed by a qualified third-party professional and display the letterhead, address, and telephone number of the office, institution, center, or organization, as appropriate, that engages or employs, whether financially compensated or not, the qualified third-party professional, or, if the qualified third-party professional is self-employed, the documentation shall display the letterhead, address, and telephone number of the qualified third-party professional.
(b)Claim means a right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured. or equitable.
(c)(1)Claimant means a person or an entity who has or purports to have a claim against a debtor or against the property of a debtor arising from coerced debt, or that persons or entitys successor or assignee. Claimant includes, but is not limited to, a debt collector or a debt buyer.
(2)Notwithstanding paragraph (1), claimant shall not include a person who caused the claim described in paragraph (1) to arise through duress, intimidation, threat, force, or fraud duress or undue influence perpetrated against the debtor.
(d)Coerced debt means a particular debt, or portion thereof, for personal, family, or household use in the name of a debtor who is a victim of domestic violence, or a victim of elder or dependent adult abuse, or a person who is a foster youth, incurred as a result of duress, intimidation, threat, force, or fraud. duress or undue influence.
(1)For purposes of this subdivision, domestic violence has the same meaning as in Section 6211 of the Family Code.
(2)For the purposes of this subdivision, foster youth has the same meaning as in Section 42238.01 of the Education Code.(3)For the purposes of this subdivision, dependent adult has the same meaning as in Section 15610.23 of the Welfare and Institutions Code.(4)For the purposes of this subdivision, elder has the same meaning as in Section 15610.27 of the Welfare and Institutions Code.(e)Debtor means a person who owes or is otherwise liable for coerced debt.
(f)Immediate family member has the same meaning as defined in paragraph (3) of subdivision (h) of Section 1946.7.
(f)(g)Person means a natural person.
(g)(h)Qualified third-party professional means any of the following:
(1)A domestic violence counselor, as defined in Section 1037.1 of the Evidence Code.
(2)A sexual assault counselor, as defined in Section 1035.2 of the Evidence Code.
(3)A Court-Appointed Special Advocate, as defined in Section 101 of the Welfare and Institutions Code.
(4)A court-appointed attorney, as defined in subdivision (e) of Section 317 of the Welfare and Institutions Code.
(5)A board certified psychiatrist or psychologist.
(6)A licensed marriage and family therapist.
(7)A licensed professional clinical counselor.
(8)A licensed clinical social worker.
(9)A social worker or caseworker employed by an adult protective service agency for the purposes described in Chapter 13 (commencing with Section 15750) of Part 3 of Division 9 of the Welfare and Institutions Code.
(10)A social worker who has completed the child welfare training program described in Article 2 (commencing with Section 16205) of Chapter 3 of Part 4 of Division 9 of the Welfare and Institutions Code.
(h)(i)(1)Sworn written certification means a document in which the author, unless the author is a judge or governmental agency, author declares under penalty of perjury as true any material fact, and which is accompanied by the following, to the extent that an item listed below is relevant to the debtors allegation that the debt is coerced debt:
(A)A copy of the debtors drivers license or identification card, as issued by the state.
(B)Any other identification document that supports the statement that the particular debt, or portion thereof, is coerced debt.
(C)An express statement that the debtor did not willingly authorize the use of the debtors name or personal information for incurring the coerced debt, and specific facts supporting the claim of coerced debt, if available, including an explanation showing that the debtor did not incur the coerced debt, and, if not all of the debt was coerced, a statement identifying the portion thereof that was coerced.
(D)Any available correspondence disputing the coerced debt after transaction information has been provided to the debtor.
(E)Documentation of the residence of the debtor at the time the coerced debt was incurred, which may include copies of bills and financial statements, such as utility bills, tax statements, or other statements from businesses sent to the debtor. Information, if known by the debtor, including, but not limited to, a credit card number or loan number, that can be used by the claimant to identify the account associated with the coerced debt and the person or persons in whose name the debt was incurred.
(F)The identity of the person or persons who coerced the debtor into incurring the debt and contact information for that person or persons, if known by the debtor, unless the debtor signs a sworn statement that disclosing this information is likely to result in abuse, as defined in Section 6203 of the Family Code, to the debtor or an immediate family member of the debtor.
(F)(G)A telephone number for contacting the person signing the certification concerning any additional information or questions, or direction that further communications to the debtor be in writing only, with the mailing address specified in the statement.
(2)The certification required by this subdivision shall be sufficient if it is in substantially the following form:
I declare under penalty of perjury that the representations made herein are true, correct, and contain no material omissions of fact.
_______(Date and Place)________ _______(Signature)________
1798.97.2.(a)Upon receipt of both of the following, a claimant shall cease collection activities until completion of the review provided in subdivision (c):
(1)Adequate documentation.
(2)The debtors sworn written certification that a particular debt, or portion thereof, being collected is coerced debt.
(b)If a debtor notifies a claimant orally that a particular debt, or portion thereof, being collected is coerced debt, the claimant shall notify the debtor, orally or in writing, that the debtors notification must be in writing. If a debtor notifies a claimant in writing that a particular debt, or portion thereof, being collected is coerced debt, but omits information required by subdivision (a), and if the claimant does not cease collection activities, the claimant shall provide written notice to the debtor of the additional information that is required.
(c)(1)Within 10 business days of receiving the complete statement and information described in subdivision (a), the claimant shall, if the claimant furnished adverse information about the debtor to a consumer credit reporting agency, notify the consumer credit reporting agency that the account is disputed.
(2)The claimant shall initiate a review considering all of the information provided by the debtor and other information available to the claimant in its file.
(3)Within 10 business days of completing the review, the claimant shall notify the debtor in writing of the claimants determination and the good faith basis for that determination.
(4)The claimant shall not recommence collection activities until the debtor has been notified in writing of the good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(d)No inference or presumption that the debt is valid or invalid, or that the debtor is liable or not liable for the particular debt, or portion thereof, shall arise if the claimant decides after the review described in subdivision (c) to cease or recommence collection activities. The exercise or nonexercise of rights under this section is not a waiver of any other right or defense of the debtor or claimant.
(e)(1)At least 30 days before filing an action pursuant to paragraph (2) of subdivision (a) of Section 1798.97.3, 1798.97.3 or other judicial action against a claimant in connection with an allegedly coerced debt, a debtor must shall submit notice of the debtors intent to file an action that includes information and against the claimant and documents that comply with subdivision (a) in writing to the claimant.
(2)The written notice described in paragraph (1) shall be sent by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date.
(3)The written notice described in paragraph (1) shall be sent to an address made available to the debtor by the claimant for receipt of the notice, or, if an address has not been identified by the claimant, to the claimants principal place of business as identified by the Secretary of State. If an address is unavailable through the Secretary of States website, the debtor may use the correspondence address of the claimant, or in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.
(4)(A)The debtor shall not commence an action described in subdivision (a) of Section 1798.97.3 or other judicial action against a claimant in connection with an allegedly coerced debt if the claimant ceases informs the debtor that it has ceased all efforts to collect on the particular debt, or portion thereof, identified in the written notice pursuant to paragraph (2) of subdivision (f) and the debtor receives written notice of this cessation before the expiration of the 30-day period.
(B)The debtor may commence an action described in subdivision (a) of Section 1798.97.3 or other judicial action against a claimant in connection with an allegedly coerced debt if either of the following conditions is satisfied:
(i)The 30-day period described in paragraph (1) expires and the collection activities have not ceased or the debtor has not received written notice that collection activities have ceased.
(ii)The debtor receives written notice pursuant to paragraph (4) of subdivision (c) of the claimants good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(5)For purposes of this subdivision, the 30-day period shall begin to run when the claimant receives the written notice.
(f)A claimant that ceases collection activities under this section and does not recommence those collection activities shall do both of the following:
(1)If the claimant has furnished adverse information to a consumer credit reporting agency regarding the debtor and a particular debt, or portion thereof, notify the agency to delete that information no later than 10 business days after making its determination.
(2)If the claimant is a debt collector, notify the creditor no later than 10 business days after making its determination that collection activities have been terminated based upon the debtors assertion that a particular debt, or portion thereof, being collected is coerced debt.
(g)A claimant that has possession of documents that the debtor is entitled to request from a creditor pursuant to Section 530.8 of the Penal Code may provide those documents to the debtor.
1798.97.3.(a)(1)A debtor may bring an action against a claimant to establish that a particular debt, or portion thereof, is coerced debt.
(2)In an action brought by a claimant to recover a particular debt against the debtor, the debtor may file a cross-complaint to establish that the particular debt, or portion thereof, is coerced debt. The notice described in subdivision (e) of Section 1798.97.2 shall not be required as a prerequisite to filing a cross-complaint.
(3)A debtor shall plead the allegations of coerced debt with particularity and shall attach adequate documentation and shall, at a minimum, attach the documents provided to the claimant pursuant to subdivision (a) of Section 1798.97.2 to the complaint or cross-complaint.
(b)If the debtor establishes by a preponderance of the evidence in an action brought by the debtor or in which the debtor filed a cross-complaint pursuant to described in subdivision (a) that the particular debt, or portion thereof, is coerced debt, the debtor shall be entitled to the following relief:
(1)A declaratory judgment that the debtor is not obligated to the claimant on the particular debt, or portion thereof, that is coerced debt.
(2)An injunction prohibiting the claimant from holding or attempting to hold the debtor personally liable on the particular debt, or portion thereof, that is coerced debt, and prohibiting the claimant from enforcing a judgment related to the particular debt, or portion thereof, that is coerced debt against the debtor.
(3)An order dismissing any cause of action brought by the claimant to enforce or collect on the particular debt from the debtor or, if only a portion of the debt is established as coerced debt, an order directing that the complaint and judgment, if any, in the action be amended to reflect only the portion of the particular debt that is not coerced debt.
(c)A debtor who files knowingly false or unmeritorious motions, pleadings, or other papers or engages in other tactics that are frivolous or solely intended to cause unnecessary delay against a claimant shall be liable for the claimants attorneys fees and costs in defending the lawsuit.
(d)The claimant may move the court to make written findings regarding evidence related to the person who caused the coerced debt to be incurred.
(e)Where some or all of a claim is established as having arisen from coerced debt, a claimant shall have standing, and may use all rights and remedies, to collect by any lawful means that claim, or portion thereof, from the person or persons determined to have coerced the debt, or against a person who used or possessed money, goods, services, or property obtained through coerced debt.
(f)The statute of limitations for a claimant to bring an action to collect coerced debt from any person determined to have coerced the debt shall run from the date of the courts determination that the person caused the duress, intimidation, threat, force, or fraud giving rise to the coerced debt at issue and shall be brought within five years of that determination.
(g)Information regarding a particular debt, or portion thereof, documented to be coerced debt shall be deemed incomplete or inaccurate for purposes of subdivision (a) of Section 1785.25.1798.97.4.A court shall have continuing jurisdiction over an action filed pursuant to this title in order to provide for the joinder of related causes of action based on the contention that a claimants claim against a debtor is for coerced debt, and the joinder of further defendants based on the contention that their claims against the debtor are coerced debts, regardless of whether a final judgment has been entered as to any defendant. The courts continuing jurisdiction shall terminate 10 years after filing of the original action or cross-complaint unless the court, before that date, finds good cause to extend jurisdiction over the matter.1798.97.5.An action brought pursuant to this title or any joinder of a defendant may be brought within four years of the date the debtor knew, or in the exercise of reasonable diligence should have known, of the existence of facts which would give rise to the bringing of the action against or filing of cross-complaint against, or joinder of, the defendant. This limitations period shall not apply to the filing of a cross-complaint pursuant to paragraph (2) of subdivision (a) of Section 1798.97.3.1798.97.6.1798.97.4.(a)This title does not apply to secured debts.
(b)This title does not diminish the rights of a claimant to recover payment for a coerced debt from the person or persons who coerced a debtor into incurring that debt.
(c)This title does not reduce or eliminate any other rights or defenses available to a debtor or claimant pursuant to any other law.
1798.97.5.(a)Except as set forth in subdivision (b), this title applies only to debts incurred on or after January 1, 2023.
(b)Notwithstanding subdivision (a), a debtor may file a cross-complaint described by paragraph (2) of subdivision (a) of Section 1798.97.3 in an action filed by a claimant to collect a debt incurred prior to January 1, 2023, in which case, this title applies to that action, unless a final judgment has been entered in that action.
1798.97.7.1798.97.6.If any provision of this title or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this title that can be given effect without the invalid provision or application, and to this end the provisions of this title are severable.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares all of the following:
(a)Economic abuse is a serious issue impacting survivors of domestic violence, survivors of elder or dependent adult abuse, and foster youth.
(b)Coerced or fraudulent debts, a common component of economic abuse, can ruin an individuals credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c)The debt and poor credit score resulting from economic abuse can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d)Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e)In cases of elder abuse, family members and other trusted individuals can use their powerful positions to commit this type of abuse and take out debts through coercion or fraud.
(f)Youth in foster care are particularly vulnerable because they may have multiple placements that give many adults access to their personal information.
SEC. 2.Title 1.81.35 (commencing with Section 1798.97.1) is added to Part 4 of Division 3 of the Civil Code, to read:1.81.35.Coerced Debt1798.97.1.For purposes of this title, the following definitions apply:
(a)Adequate documentation means documentation that identifies a particular debt, or portion thereof, as coerced debt, and includes the identity of any person alleged to have caused the coerced debt. The debtor shall not be required to disclose the identity of any person alleged to have caused coerced debt if they provide a sworn statement that disclosure would compromise their safety or the safety of their loved ones. Adequate documentation means any of the following:
(1)A police report identifying a particular debt, or portion thereof, as coerced debt.
(2)A Federal Trade Commission identity theft report identifying a particular debt, or portion thereof, as coerced debt.
(3)A court order issued pursuant to Section 6340 of the Family Code relating to domestic violence, Section 213.5 of the Welfare and Institutions Code relating to a dependent or ward of the juvenile court, or Section 15657.03 of the Welfare and Institutions Code relating to elder or dependent abuse identifying a particular debt, or portion thereof, as coerced debt.
(4)(A)A sworn written certification from a qualified third-party professional based on information they received while acting in a professional capacity identifying a particular debt, or portion thereof, as coerced debt.
(B)The documentation described by subparagraph (A) shall be signed by a qualified third-party professional and display the letterhead, address, and telephone number of the office, institution, center, or organization, as appropriate, that engages or employs, whether financially compensated or not, the qualified third-party professional, or, if the qualified third-party professional is self-employed, the documentation shall display the letterhead, address, and telephone number of the qualified third-party professional.
(b)Claim means a right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
(c)(1)Claimant means a person or an entity who has or purports to have a claim against a debtor or against the property of a debtor arising from coerced debt, or that persons or entitys successor or assignee. Claimant includes, but is not limited to, a debt collector or a debt buyer.
(2)Notwithstanding paragraph (1), claimant shall not include a person who caused the claim described in paragraph (1) to arise through duress, intimidation, threat, force, or fraud perpetrated against the debtor.
(d)Coerced debt means a particular debt, or portion thereof, for personal, family, or household use in the name of a debtor who is a victim of domestic violence, a victim of elder or dependent adult abuse, or a person who is a foster youth, incurred as a result of duress, intimidation, threat, force, or fraud.
(1)For purposes of this subdivision, domestic violence has the same meaning as in Section 6211 of the Family Code.
(2)For the purposes of this subdivision, foster youth has the same meaning as in Section 42238.01 of the Education Code.
(3)For the purposes of this subdivision, dependent adult has the same meaning as in Section 15610.23 of the Welfare and Institutions Code.
(4)For the purposes of this subdivision, elder has the same meaning as in Section 15610.27 of the Welfare and Institutions Code.
(e)Debtor means a person who owes or is otherwise liable for coerced debt.
(f)Person means a natural person.
(g)Qualified third-party professional means any of the following:
(1)A domestic violence counselor, as defined in Section 1037.1 of the Evidence Code.
(2)A sexual assault counselor, as defined in Section 1035.2 of the Evidence Code.
(3)A Court-Appointed Special Advocate, as defined in Section 101 of the Welfare and Institutions Code.
(4)A court-appointed attorney, as defined in subdivision (e) of Section 317 of the Welfare and Institutions Code.
(5)A board certified psychiatrist or psychologist.
(6)A licensed marriage and family therapist.
(7)A licensed professional clinical counselor.
(8)A licensed clinical social worker.
(9)A social worker or caseworker employed by an adult protective service agency for the purposes described in Chapter 13 (commencing with Section 15750) of Part 3 of Division 9 of the Welfare and Institutions Code.
(10)A social worker who has completed the child welfare training program described in Article 2 (commencing with Section 16205) of Chapter 3 of Part 4 of Division 9 of the Welfare and Institutions Code.
(h)(1)Sworn written certification means a document in which the author, unless the author is a judge or governmental agency, declares under penalty of perjury as true any material fact, and which is accompanied by the following, to the extent that an item listed below is relevant to the debtors allegation that the debt is coerced debt:
(A)A copy of the debtors drivers license or identification card, as issued by the state.
(B)Any other identification document that supports the statement that the particular debt, or portion thereof, is coerced debt.
(C)An express statement that the debtor did not willingly authorize the use of the debtors name or personal information for incurring the coerced debt, and specific facts supporting the claim of coerced debt, if available, including an explanation showing that the debtor did not incur the coerced debt, and, if not all of the debt was coerced, a statement identifying the portion thereof that was coerced.
(D)Any available correspondence disputing the coerced debt after transaction information has been provided to the debtor.
(E)Documentation of the residence of the debtor at the time the coerced debt was incurred, which may include copies of bills and financial statements, such as utility bills, tax statements, or other statements from businesses sent to the debtor.
(F)A telephone number for contacting the person signing the certification concerning any additional information or questions, or direction that further communications to the debtor be in writing only, with the mailing address specified in the statement.
(2)The certification required by this subdivision shall be sufficient if it is in substantially the following form:
I declare under penalty of perjury that the representations made herein are true, correct, and contain no material omissions of fact.
_______(Date and Place)________ _______(Signature)________
1798.97.2.(a)Upon receipt of both of the following, a claimant shall cease collection activities until completion of the review provided in subdivision (c):
(1)Adequate documentation.
(2)The debtors sworn written certification that a particular debt, or portion thereof, being collected is coerced debt.
(b)If a debtor notifies a claimant orally that a particular debt, or portion thereof, being collected is coerced debt, the claimant shall notify the debtor, orally or in writing, that the debtors notification must be in writing. If a debtor notifies a claimant in writing that a particular debt, or portion thereof, being collected is coerced debt, but omits information required by subdivision (a), and if the claimant does not cease collection activities, the claimant shall provide written notice to the debtor of the additional information that is required.
(c)(1)Within 10 business days of receiving the complete statement and information described in subdivision (a), the claimant shall, if the claimant furnished adverse information about the debtor to a consumer credit reporting agency, notify the consumer credit reporting agency that the account is disputed.
(2)The claimant shall initiate a review considering all of the information provided by the debtor and other information available to the claimant in its file.
(3)Within 10 business days of completing the review, the claimant shall notify the debtor in writing of the claimants determination and the good faith basis for that determination.
(4)The claimant shall not recommence collection activities until the debtor has been notified in writing of the good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(d)No inference or presumption that the debt is valid or invalid, or that the debtor is liable or not liable for the particular debt, or portion thereof, shall arise if the claimant decides after the review described in subdivision (c) to cease or recommence collection activities. The exercise or nonexercise of rights under this section is not a waiver of any other right or defense of the debtor or claimant.
(e)(1)At least 30 days before filing an action pursuant to paragraph (2) of subdivision (a) of Section 1798.97.3, a debtor must submit the statement notice of the debtors intent to file an action that includes information and supporting documents that comply with subdivision (a) in writing to the claimant.
(2)The written notice described in paragraph (1) shall be sent by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date.
(3)The written notice described in paragraph (1) shall be sent to the claimants principal place of business as identified by the Secretary of State. If an address is unavailable through the Secretary of States website, the debtor may use the correspondence address of the claimant, or in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.
(4)(A)The debtor shall not commence an action described in subdivision (a) of Section 1798.97.3 if the claimant ceases all efforts to collect on the particular debt debt, or portion thereof, identified in the written notice pursuant to paragraph (2) of subdivision (f) and the debtor receives written notice of this cessation before the expiration of the 30-day period.
(B)The debtor may commence an action if either of the following conditions is satisfied:
(i)The 30-day period described in paragraph (1) expires and the collection activities have not ceased or the debtor has not received written notice that collection activities have ceased.
(ii)The debtor receives written notice pursuant to paragraph (4) of subdivision (c) of the claimants good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(5)For purposes of this subdivision, the 30-day period shall begin to run when the claimant receives the written notice.
(f)A claimant that ceases collection activities under this section and does not recommence those collection activities shall do both of the following:
(1)If the claimant has furnished adverse information to a consumer credit reporting agency, agency regarding the debtor and a particular debt, or portion thereof, notify the agency to delete that information no later than 10 business days after making its determination.
(2)If the claimant is a debt collector, notify the creditor no later than 10 business days after making its determination that collection activities have been terminated based upon the debtors assertion that a particular debt, or portion thereof, being collected is coerced debt.
(g)A claimant that has possession of documents that the debtor is entitled to request from a creditor pursuant to Section 530.8 of the Penal Code may provide those documents to the debtor.
1798.97.3.(a)(1)A debtor may bring an action against a claimant to establish that a particular debt, or portion thereof, is coerced debt.
(2)In an action brought by a claimant to recover a particular debt against the debtor, the debtor may file a cross-complaint to establish that the particular debt, or portion thereof, is coerced debt. The notice described in subdivision (e) of Section 1798.97.2 shall not be required as a prerequisite to filing a cross-complaint.
(3)A debtor shall plead the allegations of coerced debt with particularity and shall attach adequate documentation to the complaint or cross-complaint.
(b)If the debtor establishes by a preponderance of the evidence in an action brought by the debtor or in which the debtor filed a cross-complaint pursuant to subdivision (a) that the particular debt, or portion thereof, is coerced debt, the debtor shall be entitled to the following relief:
(1)A declaratory judgment that the debtor is not obligated to the claimant on the particular debt, or portion thereof, that is coerced debt.
(2)An injunction prohibiting the claimant from holding or attempting to hold the debtor personally liable on the particular debt, or portion thereof, that is coerced debt, and prohibiting the claimant from enforcing a judgment related to the particular debt, or portion thereof, that is coerced debt against the debtor.
(3)An order dismissing any cause of action brought by the claimant to enforce or collect on the particular debt from the debtor or, if only a portion of the debt is established as coerced debt, an order directing that the complaint and judgment, if any, in the action be amended to reflect only the portion of the particular debt that is not coerced debt.
(c)A debtor who files false or unmeritorious motions, pleadings, or other papers or engages in other tactics that are frivolous or solely intended to cause unnecessary delay against a claimant shall be liable for the claimants attorneys fees and costs in defending the lawsuit.
(d)The claimant may move the court to make written findings regarding evidence related to the person who caused the coerced debt to be incurred.
(e)Where some or all of a claim is established as having arisen from coerced debt, a claimant shall have standing, and may use all rights and remedies, to collect by any lawful means that claim, or portion thereof, from the person or persons determined to have coerced the debt, or against a person who used or possessed money, goods, services, or property obtained through coerced debt.
(f)The statute of limitations for a claimant to bring an action to collect coerced debt from any person determined to have coerced the debt shall run from the date of the courts determination that the person caused the duress, intimidation, threat, force, or fraud giving rise to the coerced debt at issue and shall be brought within five years of that determination.
(g)Information regarding a particular debt debt, or portion thereof, documented to be coerced debt shall be deemed incomplete or inaccurate for purposes of subdivision (a) of Section 1785.25.
1798.97.4.A court shall have continuing jurisdiction over an action filed pursuant to this title in order to provide for the joinder of related causes of action based on the contention that a claimants claim against a debtor is for coerced debt, and the joinder of further defendants based on the contention that their claims against the debtor are coerced debts, regardless of whether a final judgment has been entered as to any defendant. The courts continuing jurisdiction shall terminate 10 years after filing of the original action or cross-complaint unless the court, before that date, finds good cause to extend jurisdiction over the matter.
1798.97.5.An action brought pursuant to this title or any joinder of a defendant may be brought within four years of the date the debtor knew, or in the exercise of reasonable diligence should have known, of the existence of facts which would give rise to the bringing of the action against or filing of cross-complaint against, or joinder of, the defendant. This limitations period shall not apply to the filing of a cross-complaint pursuant to paragraph (2) of subdivision (a) of Section 1798.97.3.
1798.97.6.This title does not apply to secured debts.
1798.97.7.If any provision of this title or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this title that can be given effect without the invalid provision or application, and to this end the provisions of this title are severable.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares all of the following:
(a)Economic abuse is a serious issue impacting survivors of domestic violence, survivors of elder or dependent adult abuse, and foster youth.
(b)Coerced or fraudulent debts, a common component of economic abuse, can ruin an individuals credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c)The debt and poor credit score resulting from economic abuse can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d)Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e)In cases of elder abuse, family members and other trusted individuals can use their powerful positions to commit this type of abuse and take out debts through coercion or fraud.
(f)Youth in foster care are particularly vulnerable because they may have multiple placements that give many adults access to their personal information.
SEC. 2.Title 1.81.35 (commencing with Section 1798.97.1) is added to Part 4 of Division 3 of the Civil Code, to read:1.81.35.Coerced Debt1798.97.1.For purposes of this title, the following definitions apply:
(a)Adequate documentation means documentation that identifies a particular debt, or portion thereof, as coerced debt, and includes the identity of any person alleged to have caused the coerced debt. The survivor debtor shall not be required to disclose the identity of any person alleged to have caused coerced debt if they provide a sworn statement that disclosure would compromise their safety or the safety of their loved ones. Adequate documentation means any of the following:
(1)A police report indicating that identifying a particular debt, or portion thereof, is allegedly as coerced debt.
(2)A Federal Trade Commission identity theft report finding that identifying a particular debt, or portion thereof, is allegedly as coerced debt.
(3)A court order issued pursuant to Section 6340 of the Family Code relating to domestic violence, Section 213.5 of the Welfare and Institutions Code relating to a dependent or ward of the juvenile court, or Section 15657.03 of the Welfare and Institutions Code relating to elder or dependent abuse identifying a particular debt, or portion thereof, as allegedly being coerced debt.
(4)(A)A sworn written certification from a qualified third-party professional based on information they received while acting in a professional capacity indicating that identifying a particular debt, or a portion thereof, is allegedly as coerced debt.
(B)The documentation described by subparagraph (A) shall be signed by a qualified third-party professional and display the letterhead, address, and telephone number of the office, institution, center, or organization, as appropriate, that engages or employs, whether financially compensated or not, the qualified third-party professional, or, if the qualified third-party professional is self-employed, the documentation shall display the letterhead, address, and telephone number of the qualified third-party professional.
(b)Claim means a right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
(c)(1)Claimant means a person or an entity who has or purports to have a claim against a debtor or alleged debtor or against the property of a debtor or an alleged debtor arising from a coerced debt, or that persons or entitys successor or assignee, including, but not limited to, assignee. Claimant includes, but is not limited to, a debt collector and or a debt buyer.
(2)Notwithstanding paragraph (1), claimant shall not include a person who caused the claim described in paragraph (1) to arise through duress of the debtor or alleged duress, intimidation, threat, force, or fraud perpetrated against the debtor.
(d)Coerced debt means a particular debt, or portion of a debt, thereof, for personal, family, or household use in the name of a debtor who is a victim of domestic violence, a victim of elder or dependent adult abuse, or a person who is a foster youth, incurred as a result of duress, intimidation, threat, force, fraud, a victim of domestic violence, a victim of elder or dependent adult abuse, or a person who is a foster youth. or fraud.
(1)For purposes of this subdivision, victim of domestic domestic violence has the same meaning as in Section 6211 of the Family Code.
(2)For the purposes of this subdivision, foster youth has the same meaning as in Section 42238.01 of the Education Code.
(3)For the purposes of this subdivision, dependent adult and elder have has the same meanings meaning as in Sections Section 15610.23 and 15610.27 of the Welfare and Institutions Code, respectively. Code.
(4)For the purposes of this subdivision, elder has the same meaning as in Section 15610.27 of the Welfare and Institutions Code.
(e)Debtor means a person who owes or is otherwise liable for a coerced debt.
(f)Person means a natural person.
(g)Qualified third-party professional means any of the following:
(1)A domestic violence counselor, as defined in Section 1037.1 of the Evidence Code.
(2)A sexual assault counselor, as defined in Section 1035.2 of the Evidence Code.
(3)A Court-Appointed Special Advocate, as defined in Section 101 of the Welfare and Institutions Code.
(4)A court-appointed attorney, as defined in subdivision (e) of Section 317 of the Welfare and Institutions Code.
(5)A board certified psychiatrist or psychologist.
(6)A licensed marriage and family therapist.
(7)A licensed professional clinical counselor.
(8)A licensed clinical social worker.
(9)A social worker or caseworker employed by an adult protective service agency for the purposes described in Chapter 13 (commencing with Section 15750) of Part 3 of Division 9 of the Welfare and Institutions Code.
(10)A social worker who has completed the child welfare training program described in Article 2 (commencing with Section 16205) of Chapter 3 of Part 4 of Division 9 of the Welfare and Institutions Code.
(h)Sworn (1)Sworn written certification means a document in which the author, unless the author is a judge or governmental agency, declares under penalty of perjury as true any material fact, and which contains or is accompanied by the following, to the extent that an item listed below is relevant to the debtors allegation that the debt is coerced debt:
(1)(A)A copy of the debtors drivers license or identification card, as issued by the state.
(2)(B)Any other identification document that supports the statement of that the debt in question particular debt, or portion thereof, is coerced debt.
(3)(C)An express statement that the debtor did not willingly authorize the use of the debtors name or personal information for incurring the coerced debt, and specific facts supporting the claim of coerced debt, if available, including an explanation showing that the debtor did not incur the allegedly coerced debt, and, if not all of the debt was coerced, a statement identifying the portion of the debt thereof that was coerced.
(4)(D)Any available correspondence disputing the allegedly coerced debt after transaction information has been provided to the debtor.
(5)(E)Documentation of the residence of the debtor at the time the allegedly coerced debt was incurred, which may include copies of bills and financial statements, such as utility bills, tax statements, or other statements from businesses sent to the debtor.
(6)(F)A telephone number for contacting the person signing the certification concerning any additional information or questions, or direction that further communications to the debtor be in writing only, with the mailing address specified in the statement.
(7)(2)The certification required by this subdivision shall be sufficient if it is in substantially the following form:
I certify declare under penalty of perjury that the representations made herein are true, correct, and contain no material omissions of fact.
_______(Date and Place)________ _______(Signature)________
1798.97.2.(a)Upon receipt of both of the following, a claimant shall cease collection activities until completion of the review provided in subdivision (c):
(1)One or more pieces of adequate Adequate documentation.
(2)The debtors sworn written certification that some or all of the specific debt a particular debt, or portion thereof, being collected is coerced debt.
(b)If a debtor notifies a claimant orally that some or all of the specific debt a particular debt, or portion thereof, being collected is a coerced debt, the claimant shall notify the debtor, orally or in writing, that the debtors notification must be in writing. If a debtor notifies a claimant in writing that some or all of the specific debt a particular debt, or portion thereof, being collected is a coerced debt, but omits information required by subdivision (a}, (a), and if the claimant does not cease collection activities, the claimant shall provide written notice to the debtor of the additional information that is required.
(c)Within (1)Within 10 business days of receiving the complete statement and information described in subdivision (a), the claimant shall, if the claimant furnished adverse information about the debtor to a consumer credit reporting agency, notify the consumer credit reporting agency that the account is disputed, and disputed.
(2)The claimant shall initiate a review considering all of the information provided by the debtor and other information available to the claimant in its file. The
(3)Within 10 business days of completing the review, the claimant shall send notice of its determination to notify the debtor no later than 10 business days after concluding the review. The claimant may recommence debt collection activities only upon making a good faith determination that the information does not establish that some or all of the specific debt being collected is a coerced debt. The claimants determination shall be made in a manner consistent with the provisions of subsection (1) of Section 1692 of Title 15 of the United States Code, as incorporated by Section 1788.17. The claimant shall notify the debtor in writing of that determination and the basis for that determination before proceeding with any further collection activities. The claimants determination shall be based on all of the information provided by the debtor and other information available to the claimant in its file. in writing of the claimants determination and the good faith basis for that determination.
(4)The claimant shall not recommence collection activities until the debtor has been notified in writing of the good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(d)No inference or presumption that the debt is valid or invalid, or that the debtor is liable or not liable for the particular debt, or portion thereof, shall arise if the claimant decides after the review described in subdivision (c) to cease or recommence the debt collection activities. The exercise or nonexercise of rights under this section is not a waiver of any other right or defense of the debtor or claimant.
(e)The statement and supporting documents that comply with subdivision (a) may also satisfy, to the extent those documents meet the requirements of, the notice requirement of Section 1798.97.3. (1)At least 30 days before filing an action pursuant to paragraph (2) of subdivision (a) of Section 1798.97.3, a debtor must submit the statement and supporting documents that comply with subdivision (a) in writing to the claimant.
(2)The written notice described in paragraph (1) shall be sent by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date.
(3)The written notice described in paragraph (1) shall be sent to the claimants principal place of business as identified by the Secretary of State. If an address is unavailable through the Secretary of States website, the debtor may use the correspondence address of the claimant, or in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.
(4)The debtor shall not commence an action described in subdivision (a) of Section 1798.97.3 if the claimant ceases all efforts to collect on the particular debt identified in the written notice pursuant to paragraph (2) of subdivision (f) before the expiration of the 30-day period.
(5)For purposes of this subdivision, the 30-day period shall begin to run when the claimant receives the written notice.
(f)A claimant that ceases debt collection activities under this section and does not recommence those debt collection activities shall do both of the following:
(1)If the claimant has furnished adverse information to a consumer credit reporting agency, notify the agency to delete that information no later than 10 business days after making its determination.
(2)If the claimant is a debt collector, notify the creditor no later than 10 business days after making its determination that debt collection activities have been terminated based upon the debtors assertion that some or all of the specific debt a particular debt, or portion thereof, being collected is a coerced debt.
(g)A claimant that has possession of documents that the debtor is entitled to request from a creditor pursuant to Section 530.8 of the Penal Code may provide those documents to the debtor.
1798.97.3.(a)(1)An alleged A debtor may bring an action against a claimant to establish that the claimants claim, a particular debt, or a portion thereof, arises from a is coerced debt.
(2)In an action brought by a claimant to recover a claim particular debt against the alleged debtor, the alleged debtor may file a cross-complaint to establish that the claim, particular debt, or a portion thereof, arose from a is coerced debt. In the case of a cross-complaint, the The notice set forth in subdivision (b) described in subdivision (e) of Section 1798.97.2 shall not be required. required as a prerequisite to filing a cross-complaint.
(3)An alleged A debtor shall plead the allegations of coerced debt with particularity and shall attach adequate documentation to the complaint or cross-complaint.
(b)(1)At least 30 days before commencing an action described by paragraph (1) of subdivision (a), the alleged debtor shall provide the claimant with written notice of the intent to file the action or cross-complaint, which shall include a description of the alleged coerced debt and the basis for the assertion that the debt is a coerced debt. The written notice shall be sent by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date. The written notice shall be sent to the claimants principal place of business as identified by the California Secretary of State. If an address is unavailable through the Secretary of States internet website, the alleged debtor may use the correspondence address of the claimant, or, in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.(2)The alleged debtor shall not commence an action or file a cross-complaint described in subdivision (a) if the claimant ceases all efforts to collect on the claim identified in the written notice provided pursuant to paragraph (1) before the expiration of the 30-day period.(3)For purposes of this subdivision, the 30-day period shall begin to run when the claimant receives the notice provided under paragraph (1). (c)(b)If the alleged debtor establishes by a preponderance of the evidence in an action brought by the debtor or in which the debtor filed a cross-complaint filed pursuant to subdivision (a) that the claim, particular debt, or a portion thereof, is a coerced debt, the debtor shall be entitled to the following relief:
(1)A declaratory judgment that the alleged debtor is not obligated to the claimant on the claim particular debt, or portion thereof thereof, that is established as having arisen from coerced debt.
(2)An injunction prohibiting the claimant from holding or attempting to hold the alleged debtor personally liable on the claim, particular debt, or the portion thereof, that is established as having arisen from coerced debt, and prohibiting the claimant from enforcing a judgment related to the claim particular debt, or portion thereof thereof, that is established as having arisen from coerced debt against the alleged debtor.
(3)An order dismissing any cause of action brought by the claimant to enforce or collect on the claim particular debt from the alleged debtor or, if only a portion of the claim debt is established as having arisen from coerced debt, an order directing that the complaint and judgment, if any, in the action be amended to reflect only the portion of the claim particular debt that did not arise from is not coerced debt.
(d)An alleged(c)A debtor who files false or unmeritorious motions, pleadings, or other papers or engages in other tactics that are frivolous or solely intended to cause unnecessary delay against a claimant shall be liable for the claimants attorneys fees and costs in defending the lawsuit.
(e)(d)The claimant may move the court to make written findings regarding evidence related to the person who caused the coerced debt to be incurred.
(f)(e)Where some or all of a claim is established as having arisen from coerced debt, a claimant shall have standing standing, and may use all rights and remedies, to collect by any lawful means that claim claim, or portion thereof thereof, from the person or persons determined to have coerced the debt. debt, or against a person who used or possessed money, goods, services, or property obtained through coerced debt.
(g)(f)The statute of limitations for a claimant to bring an action to collect a coerced debt from any person determined to have coerced the debt shall run from the date of the courts determination that the person caused the duress duress, intimidation, threat, force, or fraud giving rise to the coerced debt at issue and shall be brought within five years of that determination.
(h)(g)Information regarding a consumer particular debt documented to be a coerced debt shall be deemed incomplete or inaccurate for purposes of subdivision (a) of Section 1785.25.
1798.97.4.A court shall have continuing jurisdiction over an action filed pursuant to this title in order to provide for the joinder of related causes of action based on the contention that an alleged a claimants claim against an alleged a debtor is for a coerced debt, and the joinder of further defendants based on the contention that their claims against the alleged debtor are coerced debts, regardless of whether a final judgment has been entered as to any defendant. The courts continuing jurisdiction shall terminate 10 years after filing of the original action or cross-complaint unless the court, before that date, finds good cause to extend jurisdiction over the matter.
1798.97.5.An action brought or cross-complaint filed pursuant to this title or any joinder of a defendant may be brought within four years of the date the alleged debtor knew or, knew, or in the exercise of reasonable diligence should have known, of the existence of facts which would give rise to the bringing of the action against or filing of cross-complaint against, or joinder of, the defendant. This limitations period shall not apply to the filing of a cross-complaint pursuant to paragraph (2) of subdivision (a) of Section 1798.97.3.
1798.97.6.A claimant may use all rights and remedies against a person who caused a coerced debt to be incurred or against a person who used or possessed money, goods, services, or property obtained through a coerced debt. This title does not apply to secured debts.
1798.97.7.This title does not apply to secured debts. If any provision of this title or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this title that can be given effect without the invalid provision or application, and to this end the provisions of this title are severable.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares all of the following:
(a)Economic abuse is a serious issue impacting survivors of domestic violence, survivors of elder or dependent adult abuse, and foster youth, and other individuals. youth.
(b)Coerced or fraudulent debts, a common component of economic abuse, can ruin an individuals credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c)The debt and poor credit score resulting from economic abuse can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d)Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e)In cases of elder abuse, family members and other trusted individuals can use their powerful positions to commit this type of abuse and take out debts through coercion or fraud.
(f)Youth in foster care are particularly vulnerable because they may have multiple placements that give many adults access to their personal information.
(g)A pilot project in the City of Los Angeles worked with over 100 foster youth who had hundreds of separate accounts reported in their names as the result of errors or identity theft. A 2018 survey conducted by the Identity Theft Resource Center and Symantec that included youth in the Counties of Santa Clara and San Diego found that 15 percent of foster youth surveyed were victims of identity theft. SEC. 2.Title 1.81.35 (commencing with Section 1798.97.1) is added to Part 4 of Division 3 of the Civil Code, to read:1.81.35.Coerced Debt1798.97.1.For purposes of this title, the following definitions apply:
(a)Adequate documentation means documentation that identifies a particular debt, or portion thereof, as coerced debt, and includes the identity of any person alleged to have caused the debt. The survivor shall not be required to disclose the identity of any person alleged to have caused coerced debt if they provide a sworn statement that disclosure would compromise their safety or the safety of their loved ones. Adequate documentation means any of the following:
(1)A police report indicating that a particular debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation. debt, or portion thereof, is allegedly coerced debt.
(2)A Federal Trade Commission identity theft report finding that a particular debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation. debt, or portion thereof, is allegedly coerced debt.
(3)A court order issued pursuant to Section 6340 of the Family Code relating to domestic violence, Section 213.5 of the Welfare and Institutions Code relating to a dependent of juvenile court, or Section 15657.03 of the Welfare and Institutions Code relating to elder or dependent abuse identifying a particular debt as having been incurred as a result of duress, intimidation, threat, force, fraud, or exploitation. debt, or portion thereof, as allegedly being coerced debt.
(4)(A)Documentation A sworn written certification from a qualified third-party professional based on information they received while acting in a professional capacity indicating that a particular debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation. debt, or a portion thereof, is allegedly coerced debt.
(B)The documentation described by subparagraph (A) may shall be signed by a qualified third-party professional only if the documentation displays and display the letterhead, address, and phone telephone number of the office, institution, center, or organization, as appropriate, that engages or employs, whether financially compensated or not, the qualified third-party professional, or or, if the qualified third-party professional is self-employed, the documentation displays shall display the letterhead, address, and phone telephone number of the qualified third-party professional if they are self-employed. professional.
(b)Claim means a right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
(c)Coerced debt means a debt for personal, family, or household use incurred as a result of duress, intimidation, threat, force, fraud, or exploitation of the debtors resources or personal information.(d)(c)(1)Creditor Claimant means a person or an entity that who has or purports to have a claim against a debtor or an alleged debtor or against the property of a debtor or an alleged debtor arising from a coerced debt, or that persons or entitys successor or assignee, including, but not limited to, a debt collector and a debt buyer.
(2)Notwithstanding paragraph (1), creditor claimant shall not include a person who caused the claim described in paragraph (1) to arise through duress, intimidation, threat, force, fraud, or exploitation of the resources or personal identifying information of the debtor or alleged debtor for personal gain. duress of the debtor or alleged debtor.
(d)Coerced debt means a debt, or portion of a debt, for personal, family, or household use in the name of a debtor incurred as a result of duress, intimidation, threat, force, fraud, a victim of domestic violence, a victim of elder or dependent adult abuse, or a person who is a foster youth.
(1)For purposes of this subdivision, victim of domestic violence has the same meaning as in Section 6211 of the Family Code.
(2)For the purposes of this subdivision, foster youth has the same meaning as in Section 42238.01 of the Education Code.
(3)For the purposes of this subdivision, dependent adult and elder have the same meanings as in Sections 15610.23 and 15610.27 of the Welfare and Institutions Code, respectively.
(e)Debtor means a person who owes or is otherwise liable for a coerced debt.
(f)Personal information means the name, address, telephone number, drivers license number, social security number, email address, social media profile or screen name, place of employment, employee identification number, mothers maiden name, demand deposit account number, savings account number, checking account number, or credit card number of a debtor or alleged debtor. Person means a natural person.
(g)Qualified third-party professional means any of the following:
(1)A domestic violence counselor, as defined in Section 1037.1 of the Evidence Code.
(2)A sexual assault counselor, as defined in Section 1035.2 of the Evidence Code.
(3)A Court-Appointed Special Advocate, as defined in Section 101 of the Welfare and Institutions Code.
(4)A court-appointed attorney, as defined in subdivision (e) of Section 317 of the Welfare and Institutions Code.
(5)A board certified psychiatrist or psychologist.
(6)A licensed marriage and family therapist.
(7)A licensed professional clinical counselor.
(8)A licensed clinical social worker.
(9)A social worker or caseworker employed by an adult protective service agency for the purposes described in Chapter 13 (commencing with Section 15750) of Part 3 of Division 9 of the Welfare and Institutions Code.
(10)A social worker who has completed the child welfare training program described in Article 2 (commencing with Section 16205) of Chapter 3 of Part 4 of Division 9 of the Welfare and Institutions Code.
(h)Sworn written certification means a document in which the author, unless the author is a judge or governmental agency, declares under penalty of perjury as true any material fact, and which contains or is accompanied by the following, to the extent that an item listed below is relevant to the debtors allegation that the debt is coerced debt:
(1)A copy of the debtors drivers license or identification card, as issued by the state.
(2)Any other identification document that supports the statement of that the debt in question is coerced debt.
(3)An express statement that the debtor did not willingly authorize the use of the debtors name or personal information for incurring the coerced debt, and specific facts supporting the claim of coerced debt, if available, including an explanation showing that the debtor did not incur the allegedly coerced debt, and, if not all of the debt was coerced, a statement identifying the portion of the debt that was coerced.
(4)Any available correspondence disputing the allegedly coerced debt after transaction information has been provided to the debtor.
(5)Documentation of the residence of the debtor at the time the allegedly coerced debt was incurred, which may include copies of bills and financial statements, such as utility bills, tax statements, or other statements from businesses sent to the debtor.
(6)A telephone number for contacting the person signing the certification concerning any additional information or questions, or direction that further communications to the debtor be in writing only, with the mailing address specified in the statement.
(7)The certification required by this subdivision shall be sufficient if it is in substantially the following form:
I certify that the representations made herein are true, correct, and contain no material omissions of fact.
_______(Date and Place)________ _______(Signature)________
1798.97.2.(a)Upon receipt of both of the following, a claimant shall cease collection activities until completion of the review provided in subdivision (c):
(1)One or more pieces of adequate documentation.
(2)The debtors sworn written certification that some or all of the specific debt being collected is coerced debt.
(b)If a debtor notifies a claimant orally that some or all of the specific debt being collected is a coerced debt, the claimant shall notify the debtor, orally or in writing, that the debtors notification must be in writing. If a debtor notifies a claimant in writing that some or all of the specific debt being collected is a coerced debt, but omits information required by subdivision (a}, and if the claimant does not cease collection activities, the claimant shall provide written notice to the debtor of the additional information that is required.
(c)Within 10 business days of receiving the complete statement and information described in subdivision (a), the claimant shall, if the claimant furnished adverse information about the debtor to a consumer credit reporting agency, notify the consumer credit reporting agency that the account is disputed, and initiate a review considering all of the information provided by the debtor and other information available to the claimant in its file. The claimant shall send notice of its determination to the debtor no later than 10 business days after concluding the review. The claimant may recommence debt collection activities only upon making a good faith determination that the information does not establish that some or all of the specific debt being collected is a coerced debt. The claimants determination shall be made in a manner consistent with the provisions of subsection (1) of Section 1692 of Title 15 of the United States Code, as incorporated by Section 1788.17. The claimant shall notify the debtor in writing of that determination and the basis for that determination before proceeding with any further collection activities. The claimants determination shall be based on all of the information provided by the debtor and other information available to the claimant in its file.
(d)No inference or presumption that the debt is valid or invalid, or that the debtor is liable or not liable for the debt, shall arise if the claimant decides after the review described in subdivision (c) to cease or recommence the debt collection activities. The exercise or nonexercise of rights under this section is not a waiver of any other right or defense of the debtor or claimant.
(e)The statement and supporting documents that comply with subdivision (a) may also satisfy, to the extent those documents meet the requirements of, the notice requirement of Section 1798.97.3.
(f)A claimant that ceases debt collection activities under this section and does not recommence those debt collection activities shall do both of the following:
(1)If the claimant has furnished adverse information to a consumer credit reporting agency, notify the agency to delete that information no later than 10 business days after making its determination.
(2)If the claimant is a debt collector, notify the creditor no later than 10 business days after making its determination that debt collection activities have been terminated based upon the debtors assertion that some or all of the specific debt being collected is a coerced debt.
(g)A claimant that has possession of documents that the debtor is entitled to request from a creditor pursuant to Section 530.8 of the Penal Code may provide those documents to the debtor.
1798.97.2.1798.97.3.(a)(1)An alleged debtor may bring an action against an alleged creditor a claimant to establish that the alleged creditors claim claimants claim, or a portion thereof, arises from a coerced debt.
(2)In an action brought by an alleged creditor a claimant to recover a claim against the alleged debtor, the alleged debtor may file a cross-complaint against the alleged creditor to establish that the claim is claim, or a portion thereof, arose from a coerced debt. In the case of a cross-complaint, the notice set forth in subdivision (b) shall not be required.
(3)An alleged debtor shall plead the allegations of coerced debt with particularity and shall attach adequate documentation to the complaint or cross-complaint.
(b)(1)At least 30 days before commencing an action or filing a cross-complaint described by paragraph (1) of subdivision (a), the alleged debtor shall provide the alleged creditor claimant with written notice of the intent to file the action or cross-complaint, which shall include a description of the alleged coerced debt and the basis for the assertion that the debt is a coerced debt. The written notice shall be sent by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date. The written notice shall be sent to the alleged creditors claimants principal place of business as identified by the California Secretary of State. If an address is unavailable through the Secretary of States internet website, the alleged debtor may use the correspondence address of the alleged creditor, or claimant, or, in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.
(2)The alleged debtor shall not commence an action or file a cross-complaint described in subdivision (a) if the alleged creditor claimant ceases all efforts to collect on the claim identified in the written notice provided pursuant to paragraph (1) before the expiration of the 30-day period.
(3)For purposes of this subdivision, the 30-day period shall begin to run when the alleged debtor sends claimant receives the notice provided under paragraph (1).
(c)If the alleged debtor establishes by a preponderance of the evidence in an action brought or cross-complaint filed pursuant to subdivision (a) that the claim claim, or a portion thereof, is a coerced debt, the debtor shall be entitled to the following relief:
(1)A declaratory judgment that the alleged debtor is not obligated to the creditor claimant on the claim. claim or portion thereof that is established as having arisen from coerced debt.
(2)An injunction prohibiting the creditor claimant from holding or attempting to hold the alleged debtor personally liable on the claim claim, or the portion thereof, that is established as having arisen from coerced debt, and prohibiting the creditor claimant from enforcing a judgment related to the claim or portion thereof that is established as having arisen from coerced debt against the alleged debtor.
(3)An order dismissing any cause of action brought by the creditor claimant to enforce or collect on the claim from the alleged debtor. debtor or, if only a portion of the claim is established as having arisen from coerced debt, an order directing that the complaint and judgment, if any, in the action be amended to reflect only the portion of the claim that did not arise from coerced debt.
(d)An alleged debtor who files false or unmeritorious motions, pleadings, or other papers, conducts unnecessary discovery, papers or engages in other tactics that are frivolous or solely intended to cause unnecessary delay against an alleged creditor a claimant shall be liable for the alleged creditors claimants attorneys fees and costs in defending the lawsuit.
(e)An alleged creditor may collect against any appropriate person or entity other than the alleged debtor.(f)This title does not prevent an alleged creditor from enforcing a lien when the debt is secured by personal property.(e)The claimant may move the court to make written findings regarding evidence related to the person who caused the coerced debt to be incurred.
(f)Where some or all of a claim is established as having arisen from coerced debt, a claimant shall have standing to collect by any lawful means that claim or portion thereof from the person or persons determined to have coerced the debt.
(g)The statute of limitations for a claimant to bring an action to collect a coerced debt from any person determined to have coerced the debt shall run from the date of the courts determination that the person caused the duress giving rise to the coerced debt at issue and shall be brought within five years of that determination.
(g)(h)Information regarding a secured or unsecured consumer debt documented to be a coerced debt shall be deemed incomplete or inaccurate for purposes of subdivision (a) of Section 1785.25.
1798.97.3.1798.97.4.A court shall have continuing jurisdiction over an action or cross-complaint filed pursuant to this title in order to provide for the joinder of related causes of action based on the contention that an alleged creditors claimants claim against an alleged debtor is for a coerced debt, and the joinder of further defendants based on the contention that their claims against the alleged debtor are coerced debts, regardless of whether a final judgment has been entered as to any defendant. The courts continuing jurisdiction shall terminate 10 years after filing of the original action or cross-complaint unless the court, before that date, finds good cause to extend jurisdiction over the matter.
1798.97.4.1798.97.5.An action brought or a cross-complaint filed pursuant to this title or any joinder of a defendant pursuant to Section 1798.82 may be brought within four years of the date the alleged debtor knew or, in the exercise of reasonable diligence should have known, of the existence of facts which would give rise to the bringing of the action against or the filing of the cross-complaint against, or joinder of, the defendant.
1798.97.5.1798.97.6.A creditor claimant may use all rights and remedies against a person who caused a coerced debt to be incurred or against a person who used or possessed money, goods, services, or property obtained through a coerced debt.
1798.97.6.1798.97.7.This title does not apply to debts secured by real property. debts.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares all of the following:
(a)Economic abuse is a serious issue impacting survivors of domestic violence, survivors of elder or dependent adult abuse, foster youth, and other individuals.
(b)Coerced or fraudulent debts, a common component of economic abuse, can ruin an individuals credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c)The debt and poor credit score resulting from economic abuse can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d)Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e)In cases of elder abuse, family members and other trusted individuals can use their powerful positions to commit this type of abuse and take out debts through coercion or fraud.
(f)Youth in foster care are particularly vulnerable because they may have multiple placements that give many adults access to their personal information.
(g)A pilot project in the City of Los Angeles worked with over 100 foster youth who had hundreds of separate accounts reported in their names as the result of errors or identity theft. A 2018 survey conducted by the Identity Theft Resource Center and Symantec that included youth in the Counties of Santa Clara and San Diego found that 15 percent of foster youth surveyed were victims of identity theft.
SEC. 2.Title 1.81.35 (commencing with Section 1798.97.1) is added to Part 4 of Division 3 of the Civil Code, to read:1.81.35.Coerced Debt1798.97.1.For purposes of this title, the following definitions apply:
(a)Adequate documentation means any of the following:
(1)A police report indicating that a particular debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(2)A Federal Trade Commission identity theft report finding that a particular debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(3)A court order issued pursuant to Section 6340 of the Family Code relating to domestic violence, Section 213.5 of the Welfare and Institutions Code relating to a dependent of juvenile court, or Section 15657.03 of the Welfare and Institutions Code relating to elder or dependent abuse identifying a particular debt as having been incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(4)(A)Documentation from a qualified third-party professional based on information they received while acting in a professional capacity indicating that a particular debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(B)The documentation described by subparagraph (A) may be signed by a qualified third-party professional only if the documentation displays the letterhead, address, and phone number of the office, institution, center, or organization, as appropriate, that engages or employs, whether financially compensated or not, the qualified third-party professional, or if the documentation displays the letterhead, address, and phone number of the qualified third-party professional if they are self-employed.
(b)Claim means a right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
(c)Coerced debt means a debt for personal, family, or household use incurred as a result of duress, intimidation, threat, force, fraud, or exploitation of the debtors resources or personal information.
(d)(1)Creditor means a person or an entity that has a claim against a debtor or an alleged debtor or against the property of a debtor or an alleged debtor arising from a coerced debt, or that persons or entitys successor or assignee, including, but not limited to, a debt collector and a debt buyer.
(2)Notwithstanding paragraph (1), creditor shall not include a person who caused the claim described in paragraph (1) to arise through duress, intimidation, threat, force, fraud, or exploitation of the resources or personal identifying information of the debtor or alleged debtor for personal gain.
(e)Debtor means a person who owes or is otherwise liable for a coerced debt.
(f)Personal information means the name, address, telephone number, drivers license number, social security number, email address, social media profile or screen name, place of employment, employee identification number, mothers maiden name, demand deposit account number, savings account number, checking account number, or credit card number of a debtor or alleged debtor.
(g)Qualified third-party professional means any of the following:
(1)A domestic violence counselor, as defined in Section 1037.1 of the Evidence Code.
(2)A sexual assault counselor, as defined in Section 1035.2 of the Evidence Code.
(3)A Court-Appointed Special Advocate, as defined in Section 101 of the Welfare and Institutions Code.
(4)A court-appointed attorney, as defined in subdivision (e) of Section 317 of the Welfare and Institutions Code.
(5)A board certified psychiatrist or psychologist.
(6)A licensed marriage and family therapist.
(7)A licensed professional clinical counselor.
(8)A licensed clinical social worker.
(9)A social worker or caseworker employed by an adult protective service agency for the purposes described in Chapter 13 (commencing with Section 15750) of Part 3 of Division 9 of the Welfare and Institutions Code.
(10)A social worker who has completed the child welfare training program described in Article 2 (commencing with Section 16205) of Chapter 3 of Part 4 of Division 9 of the Welfare and Institutions Code.
1798.97.2.(a)(1)An alleged debtor may bring an action against an alleged creditor to establish that the alleged creditors claim arises from a coerced debt.
(2)In an action brought by an alleged creditor to recover a claim against the alleged debtor, the alleged debtor may file a cross-complaint against the alleged creditor to establish that the claim is a coerced debt.
(3)An alleged debtor shall attach adequate documentation to the complaint or cross-complaint.
(b)(1)At least 30 days before commencing an action or filing a cross-complaint described by subdivision (a), the alleged debtor shall provide the alleged creditor with written notice of the intent to file the action or cross-complaint, which shall include a description of the alleged coerced debt and the basis for the assertion that the debt is a coerced debt. The written notice shall be sent to the alleged creditors principal place of business as identified by the California Secretary of State. If an address is unavailable through the Secretary of States internet website, the alleged debtor may use the correspondence address of the alleged creditor, or in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.
(2)The alleged debtor shall not commence an action or file a cross-complaint described in subdivision (a) if the alleged creditor ceases all efforts to collect on the claim identified in the written notice provided pursuant to paragraph (1) before the expiration of the 30-day period.
(3)For purposes of this subdivision, the 30-day period shall begin to run when the alleged debtor sends the notice provided under paragraph (1).
(c)If the alleged debtor establishes by a preponderance of the evidence that the claim is a coerced debt, the debtor shall be entitled to the following relief:
(1)A declaratory judgment that the alleged debtor is not obligated to the creditor on the claim.
(2)An injunction prohibiting the creditor from holding or attempting to hold the alleged debtor personally liable on the claim and prohibiting the creditor from enforcing a judgment related to the claim against the alleged debtor.
(3)An order dismissing any cause of action brought by the creditor to enforce or collect on the claim from the alleged debtor.
(d)(1)There shall be a rebuttable presumption that a claim is a coerced debt if the alleged debtor introduces both of the following into evidence:(A)Adequate documentation.(B)Evidence that the claim was incurred during the period of duress, intimidation, threat, force, fraud, or exploitation.(2)The rebuttable presumption may be overcome by the introduction of any admissible evidence the court finds is contrary to the presumption.(e)(d)An alleged debtor who files unmeritorious motions, pleadings, or other papers, conducts unnecessary discovery, or engages in other tactics that are frivolous or solely intended to cause unnecessary delay against an alleged creditor shall be liable for the alleged creditors attorneys fees and costs in defending the lawsuit.
(f)(e)An alleged creditor may collect against any appropriate person or entity other than the alleged debtor.
(g)(f)This title does not prevent an alleged creditor from enforcing a lien when the debt is secured by personal property.
(h)(g)Information regarding a secured or unsecured consumer debt documented to be a coerced debt shall be deemed incomplete or inaccurate for purposes of subdivision (a) of Section 1785.25.
1798.97.3.A court shall have continuing jurisdiction over an action or cross-complaint filed pursuant to this title in order to provide for the joinder of related causes of action based on the contention that an alleged creditors claim against an alleged debtor is for a coerced debt, and the joinder of further defendants based on the contention that their claims against the alleged debtor are coerced debts, regardless of whether a final judgment has been entered as to any defendant. The courts continuing jurisdiction shall terminate 10 years after filing of the original action or cross-complaint unless the court, before that date, finds good cause to extend jurisdiction over the matter.
1798.97.4.An action brought or a cross-complaint filed pursuant to this title or any joinder of a defendant pursuant to Section 1798.82 may be brought within four years of the date the alleged debtor knew or, in the exercise of reasonable diligence should have known, of the existence of facts which would give rise to the bringing of the action or the filing of the cross-complaint against, or joinder of, the defendant.
1798.97.5.A creditor may use all rights and remedies against a person who caused a coerced debt to be incurred or against a person who used or possessed money, goods, services, or property obtained through a coerced debt.
1798.97.6.This title does not apply to debts secured by real property.
The Legislature finds and declares all of the following:
(a)Economic abuse is a serious issue impacting survivors of domestic violence, survivors of elder or dependent adult abuse, foster youth, and other individuals.
(b)Coerced or fraudulent debts, a common component of economic abuse, can ruin an individuals credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c)The debt and poor credit score resulting from economic abuse can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d)Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e)In cases of elder abuse, family members and other trusted individuals can use their powerful positions to commit this type of abuse and take out debts through coercion or fraud.
(f)Youth in foster care are particularly vulnerable because they may have multiple placements that give many adults access to their personal information.
(g)A pilot project in the City of Los Angeles worked with over 100 foster youth who had hundreds of separate accounts reported in their names as the result of errors or identity theft. A 2018 survey conducted by the Identity Theft Resource Center and Symantec that included youth in the Counties of Santa Clara and San Diego found that 15 percent of foster youth surveyed were victims of identity theft.
SEC. 2.Title 1.81.35 (commencing with Section 1798.97.1) is added to Part 4 of Division 3 of the Civil Code, to read:1.81.35.Coerced Debt1798.97.1.For purposes of this title, the following definitions apply:
(a)Adequate documentation means any of the following:
(1)A police report indicating that a particular debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(2)A Federal Trade Commission identity theft report finding that a particular debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(3)A court order issued pursuant to Section 6340 of the Family Code relating to domestic violence, Section 213.5 of the Welfare and Institutions Code relating to a dependent of juvenile court, or Section 15657.03 of the Welfare and Institutions Code relating to elder or dependent abuse identifying a particular debt as having been incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(4)(A)Documentation from a qualified third-party professional based on information they received while acting in a professional capacity indicating that a particular debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(B)The documentation described by subparagraph (A) may be signed by a qualified third-party professional only if the documentation displays the letterhead, address, and phone number of the office, institution, center, or organization, as appropriate, that engages or employs, whether financially compensated or not, the qualified third-party professional, or if the documentation displays the letterhead, address, and phone number of the qualified third-party professional if they are self-employed.
(b)Claim means a right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
(c)Coerced debt means a debt for personal, family, or household use incurred as a result of duress, intimidation, threat, force, fraud, or exploitation of the debtors resources or personal information.
(d)(1)Creditor means a person or an entity that has a claim against a debtor or an alleged debtor or against the property of a debtor or an alleged debtor arising from a coerced debt, or that persons or entitys successor or assignee, including, but not limited to, a debt collector and a debt buyer.
(2)Notwithstanding paragraph (1), creditor shall not include a person who caused the claim described in paragraph (1) to arise through duress, intimidation, threat, force, fraud, or exploitation of the resources or personal identifying information of the debtor or alleged debtor for personal gain.
(e)Debtor means a person who owes or is otherwise liable for a coerced debt.
(f)Personal information means the name, address, telephone number, drivers license number, social security number, email address, social media profile or screen name, place of employment, employee identification number, mothers maiden name, demand deposit account number, savings account number, checking account number, or credit card number of a debtor or alleged debtor.
(g)Qualified third-party professional means any of the following:
(1)A domestic violence counselor, as defined in Section 1037.1 of the Evidence Code.
(2)A sexual assault counselor, as defined in Section 1035.2 of the Evidence Code.
(3)A Court-Appointed Special Advocate, as defined in Section 101 of the Welfare and Institutions Code.
(4)A court-appointed attorney, as defined in subdivision (e) of Section 317 of the Welfare and Institutions Code.
(5)A board certified psychiatrist or psychologist.
(6)A licensed marriage and family therapist.
(7)A licensed professional clinical counselor.
(8)A licensed clinical social worker.
(9)A social worker or caseworker employed by an adult protective service agency for the purposes described in Chapter 13 (commencing with Section 15750) of Part 3 of Division 9 of the Welfare and Institutions Code.
(10)A social worker who has completed the child welfare training program described in Article 2 (commencing with Section 16205) of Chapter 3 of Part 4 of Division 9 of the Welfare and Institutions Code.
1798.97.2.(a)(1)An alleged debtor may bring an action against an alleged creditor to establish that the alleged creditors claim arises from a coerced debt.
(2)In an action brought by an alleged creditor to recover a claim against the alleged debtor, the alleged debtor may file a cross-complaint against the alleged creditor to establish that the claim is a coerced debt.
(3)An alleged debtor shall attach adequate documentation to the complaint or cross-complaint.
(b)(1)At least 30 days before commencing an action or filing a cross-complaint described by subdivision (a), the alleged debtor shall provide the alleged creditor with written notice of the intent to file the action or cross-complaint, which shall include a description of the alleged coerced debt and the basis for the assertion that the debt is a coerced debt. The written notice shall be sent to the alleged creditors principal place of business as identified by the California Secretary of State. If an address is unavailable through the Secretary of States internet website, the alleged debtor may use the correspondence address of the alleged creditor, or in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.
(2)The alleged debtor shall not commence an action or file a cross-complaint described in subdivision (a) if the alleged creditor ceases all efforts to collect on the claim identified in the written notice provided pursuant to paragraph (1) before the expiration of the 30-day period.
(3)For purposes of this subdivision, the 30-day period shall begin to run when the alleged debtor sends the notice provided under paragraph (1).
(c)If the alleged debtor establishes by a preponderance of the evidence that the claim is a coerced debt, the debtor shall be entitled to the following relief:
(1)A declaratory judgment that the alleged debtor is not obligated to the creditor on the claim.
(2)An injunction prohibiting the creditor from holding or attempting to hold the alleged debtor personally liable on the claim and prohibiting the creditor from enforcing a judgment related to the claim against the alleged debtor.
(3)An order dismissing any cause of action brought by the creditor to enforce or collect on the claim from the alleged debtor.
(d)There (1)There shall be a rebuttable presumption that a claim is a coerced debt if the alleged debtor introduces both of the following into evidence:
(1)(A)Adequate documentation.
(2)(B)Evidence that the claim was incurred during the period of duress, intimidation, threat, force, fraud, or exploitation.
(2)The rebuttable presumption may be overcome by the introduction of any admissible evidence the court finds is contrary to the presumption.
(e)An alleged debtor who files unmeritorious motions, pleadings, or other papers, conducts unnecessary discovery, or engages in other tactics that are frivolous or solely intended to cause unnecessary delay against an alleged creditor shall be liable for the alleged creditors attorneys fees and costs in defending the lawsuit.
(f)An alleged creditor may collect against any appropriate person or entity other than the alleged debtor.
(g)This title does not prevent an alleged creditor from enforcing a lien when the debt is secured by personal property.
(h)This title does not affect debts secured by real property.(i)(h)Information regarding a secured or unsecured consumer debt documented to be a coerced debt shall be deemed incomplete or inaccurate for purposes of subdivision (a) of Section 1785.25.
1798.97.3.A court shall have continuing jurisdiction over an action or cross-complaint filed pursuant to this title in order to provide for the joinder of related causes of action based on the contention that an alleged creditors claim against an alleged debtor is for a coerced debt, and the joinder of further defendants based on the contention that their claims against the alleged debtor are coerced debts, regardless of whether a final judgment has been entered as to any defendant. The courts continuing jurisdiction shall terminate 10 years after filing of the original action or cross-complaint unless the court, before that date, finds good cause to extend jurisdiction over the matter.
1798.97.4.An action brought or a cross-complaint filed pursuant to this title or any joinder of a defendant pursuant to Section 1798.82 may be brought within four years of the date the alleged debtor knew or, in the exercise of reasonable diligence should have known, of the existence of facts which would give rise to the bringing of the action or the filing of the cross-complaint against, or joinder of, the defendant.
1798.97.5.A creditor may use all rights and remedies against a person who caused a coerced debt to be incurred or against a person who used or possessed money, goods, services, or property obtained through a coerced debt.
1798.97.6.This title does not apply to debts secured by real property.
The Legislature finds and declares all of the following:
(a)Economic abuse is a serious issue impacting survivors of domestic violence, survivors of elder or dependent adult abuse, foster youth, and other individuals.
(b)Coerced or fraudulent debts, a common component of economic abuse, can ruin an individuals credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c)The debt and poor credit score resulting from economic abuse can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d)Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e)In cases of elder abuse, family members and other trusted individuals can use their powerful positions to commit this type of abuse and take out debts through coercion or fraud.
(f)Youth in foster care are particularly vulnerable because they may have multiple placements that give many adults access to their personal information.
(g)A pilot project in the City of Los Angeles worked with over 100 foster youth who had hundreds of separate accounts reported in their names as the result of errors or identity theft. A 2018 survey conducted by the Identity Theft Resource Center and Symantec that included youth in the Counties of Santa Clara and San Diego found that 15 percent of foster youth surveyed were victims of identity theft.
SEC. 2.Title 1.81.35 (commencing with Section 1798.97.1) is added to Part 4 of Division 3 of the Civil Code, to read:1.81.35.Coerced Debt1798.97.1.For purposes of this title, the following definitions apply:
(a)Adequate documentation means any of the following:
(1)A police report indicating that a particular debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(2)A Federal Trade Commission identity theft report regarding a finding that a particular debt that was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(3)A court order issued pursuant to Section 6340 of the Family Code relating to domestic violence, Section 213.5 of the Welfare and Institutions Code relating to a dependent of juvenile court, or Section 15657.03 of the Welfare and Institutions Code relating to elder or dependent abuse identifying a particular debt as resulting from having been incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(4)(A)Documentation from a qualified third-party professional based on information they received while acting in a professional capacity indicating that the a particular debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(B)Documentation The documentation described by subparagraph (A) may be signed by a qualified third-party professional only if the documentation displays the letterhead letterhead, address, and phone number of the office, institution, center, or organization, as appropriate, that engages or employs, whether financially compensated or not, the qualified third-party professional. professional, or if the documentation displays the letterhead, address, and phone number of the qualified third-party professional if they are self-employed.
(b)Claim means a right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
(c)Coerced debt means a debt for personal, family, or household use incurred in the name of a debtor through as a result of duress, intimidation, threat, force, fraud, or exploitation of the debtors resources or personal information for personal gain. information.
(d)(1)Creditor means a person or an entity that has a claim against a debtor or an alleged debtor or against the property of a debtor or an alleged debtor arising from a coerced debt, or that persons or entitys successor or assignee, including, but not limited to, a debt collector and a debt buyer.
(2)Notwithstanding paragraph (1), creditor shall not include a person who caused the claim described in paragraph (1) to arise through duress, intimidation, threat, force, fraud, or exploitation of the resources or personal identifying information of the debtor or alleged debtor for personal gain.
(e)Debtor means a person who owes or is otherwise liable for a coerced debt.
(f)Personal information means the name, address, telephone number, drivers license number, social security number, email address, social media profile or screen name, place of employment, employee identification number, mothers maiden name, demand deposit account number, savings account number, checking account number, or credit card number of a debtor or alleged debtor.
(g)Qualified third-party professional means any of the following:
(1)A domestic violence counselor, as defined in Section 1037.1 of the Evidence Code.
(2)A sexual assault counselor, as defined in Section 1035.2 of the Evidence Code.
(3)A Court-Appointed Special Advocate, as defined in Section 101 of the Welfare and Institutions Code.
(4)A court-appointed attorney, as defined in subdivision (e) of Section 317 of the Welfare and Institutions Code.
(5)A board certified psychiatrist or psychologist.
(6)A licensed marriage and family therapist.
(7)A licensed professional clinical counselor.
(8)A licensed clinical social worker.
(9)A social worker or caseworker employed by an adult protective service agency for the purposes described in Chapter 13 (commencing with Section 15750) of Part 3 of Division 9 of the Welfare and Institutions Code.
(10)A social worker who has completed the child welfare training program described in Article 2 (commencing with Section 16205) of Chapter 3 of Part 4 of Division 9 of the Welfare and Institutions Code.
1798.97.2.(a)(1)An alleged debtor may bring an action against an alleged creditor to establish that the alleged creditors claim arises from a coerced debt.
(2)In an action brought by an alleged creditor to recover a claim against the alleged debtor, the alleged debtor may file a cross-complaint against the alleged creditor to establish that the claim is a coerced debt.
(b)(1)At least 30 days before commencing an action or filing a cross-complaint described by subdivision (a), the alleged debtor shall provide the alleged creditor with written notice of the intent to file the action or cross-complaint, which shall include a description of claim at issue. the alleged coerced debt and the basis for the assertion that the debt is a coerced debt. The written notice shall be sent to the alleged creditors principal place of business as identified by the California Secretary of State. If an address is unavailable through the Secretary of States internet website, the alleged debtor may use the correspondence address of the alleged creditor, or in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.
(2)The alleged debtor shall not commence an action or file a cross-complaint described in subdivision (a) if the alleged creditor ceases all efforts to collect on the claim identified in the written notice provided pursuant to paragraph (1) before the expiration of the 30-day period.
(3)For purposes of this subdivision, the 30-day period shall begin to run when the alleged creditor receives debtor sends the notice provided under paragraph (1).
(c)If the alleged debtor establishes by a preponderance of the evidence in an action brought or cross-complaint filed pursuant to subdivision (a) that the claim is a coerced debt, the court debtor shall award all of be entitled to the following relief:
(1)A declaratory judgment that the alleged debtor is not obligated to the creditor on the claim.
(2)An injunction prohibiting the creditor from holding or attempting to hold the alleged debtor personally liable on the claim and prohibiting the creditor from enforcing a judgment related to the claim against the alleged debtor.
(3)An order dismissing any cause of action brought by the creditor to enforce or collect on the claim from the alleged debtor.
(d)There shall be a rebuttable presumption that a claim is a coerced debt if the alleged debtor introduces both of the following into evidence:
(1)Adequate documentation.
(2)Evidence that the claim was incurred during the period of duress, intimidation, threat, force, fraud, or exploitation.
(d)(e)An alleged debtor who files unmeritorious motions, pleadings, or other papers, conducts unnecessary discovery, or engages in other tactics that are frivolous or solely intended to cause unnecessary delay against an alleged creditor shall be liable for the alleged creditors attorneys fees and costs in defending the lawsuit.
(e)(f)An alleged creditor may collect against any appropriate person or entity other than the alleged debtor.
(g)This title does not prevent an alleged creditor from enforcing a lien when the debt is secured by personal property.
(h)This title does not affect debts secured by real property.
(f)(i)Information regarding a secured or unsecured consumer debt documented to be a coerced debt shall be deemed incomplete or inaccurate for purposes of subdivision (a) of Section 1785.25.
1798.97.3.A court shall have continuing jurisdiction over an action or cross-complaint filed pursuant to this title in order to provide for the joinder of related causes of action based on the contention that an alleged creditors claim against an alleged debtor is for a coerced debt, and the joinder of further defendants based on the contention that their claims against the alleged debtor are coerced debts, regardless of whether a final judgment has been entered as to any defendant. The courts continuing jurisdiction shall terminate 10 years after filing of the original action or cross-complaint unless the court, before that date, finds good cause to extend jurisdiction over the matter.
1798.97.4.An action brought or a cross-complaint filed pursuant to this title or any joinder of a defendant pursuant to Section 1798.82 may be brought within four years of the date the alleged debtor knew or, in the exercise of reasonable diligence should have known, of the existence of facts which would give rise to the bringing of the action or the filing of the cross-complaint against, or joinder of, the defendant.
1798.97.5.(a)This title does not apply to a transaction subject to the Song-Beverly Credit Card Act of 1971 (Title 1.3 (commencing with Section 1747)).(b)A1798.97.5.A creditor may use all rights and remedies against a person who caused a coerced debt to be incurred or against a person who used or possessed money, goods, services, or property obtained through a coerced debt.
The Legislature finds and declares all of the following:
(a)Economic abuse is a serious issue impacting survivors of domestic violence, survivors of elder or dependent adult abuse, foster youth, and other individuals.
(b)Coerced or fraudulent debts, a common component of economic abuse, can ruin an individuals credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c)The debt and poor credit score resulting from economic abuse can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d)Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e)In cases of elder abuse, family members and other trusted individuals can use their powerful positions to commit this type of abuse and take out debts through coercion or fraud.
(f)Youth in foster care are particularly vulnerable because they may have multiple placements that give many adults access to their personal information.
(g)A pilot project in the City of Los Angeles worked with over 100 foster youth who had hundreds of separate accounts reported in their names as the result of errors or identity theft. A 2018 survey conducted by the Identity Theft Resource Center and Symantec that included youth in the Counties of Santa Clara and San Diego found that 15 percent of foster youth surveyed were victims of identity theft.
SEC. 2.Title 1.81.35 (commencing with Section 1798.97.1) is added to Part 4 of Division 3 of the Civil Code, to read:1.81.35.Coerced Debt1798.97.1.For purposes of this title, the following definitions apply:
(a)Adequate documentation means any of the following:
(1)A police report indicating that a debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(2)A Federal Trade Commission identity theft report regarding a debt that was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(3)A court order issued pursuant to Section 6340 of the Family Code relating to domestic violence, Section 213.5 of the Welfare and Institutions Code relating to a dependent of juvenile court, or Section 15657.03 of the Welfare and Institutions Code relating to elder or dependent abuse identifying a particular debt as resulting from duress, intimidation, threat, force, fraud, or exploitation.
(4)(A)Documentation from a qualified third-party professional based on information they received while acting in a professional capacity indicating that the debt was incurred as a result of duress, intimidation, threat, force, fraud, or exploitation.
(B)Documentation described by subparagraph (A) may be signed by a qualified third-party professional only if the documentation displays the letterhead of the office, institution, center, or organization, as appropriate, that engages or employs, whether financially compensated or not, the qualified third-party professional.
(b)Claim means a right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
(c)Coerced debt means a debt incurred in the name of a debtor through duress, intimidation, threat, force, fraud, or exploitation of the debtors resources or personal information for personal gain.
(d)(1)Creditor means a person or entity that has a claim against a debtor or an alleged debtor or against the property of a debtor or an alleged debtor arising from a coerced debt, including, but not limited to, a debt collector and a debt buyer.
(2)Notwithstanding paragraph (1), creditor shall not include a person who caused the claim described in paragraph (1) to arise through duress, intimidation, threat, force, fraud, or exploitation of the resources or personal identifying information of the debtor or alleged debtor for personal gain.
(e)Debtor means a person who owes or is otherwise liable for a coerced debt.
(f)Personal information means the name, address, telephone number, drivers license number, social security number, email address, social media profile or screen name, place of employment, employee identification number, mothers maiden name, demand deposit account number, savings account number, checking account number, or credit card number of a debtor or alleged debtor.
(g)Qualified third-party professional means any of the following:
(1)A domestic violence counselor, as defined in Section 1037.1 of the Evidence Code.
(2)A sexual assault counselor, as defined in Section 1035.2 of the Evidence Code.
(3)A Court-Appointed Special Advocate, as defined in Section 101 of the Welfare and Institutions Code.
(4)A court-appointed attorney, as defined in subdivision (e) of Section 317 of the Welfare and Institutions Code.
(5)A board certified psychiatrist or psychologist.
(6)A licensed marriage and family therapist.
(7)A licensed professional clinical counselor.
(8)A licensed clinical social worker.
(9)A social worker or caseworker employed by an adult protective service agency for the purposes described in Chapter 13 (commencing with Section 15750) of Part 3 of Division 9 of the Welfare and Institutions Code.
(10)A social worker who has completed the child welfare training program described in Article 2 (commencing with Section 16205) of Chapter 3 of Part 4 of Division 9 of the Welfare and Institutions Code.
1798.97.2.(a)(1)An alleged debtor may bring an action against an alleged creditor to establish that the alleged creditors claim arises from a coerced debt.
(2)In an action brought by an alleged creditor to recover a claim against the alleged debtor, the alleged debtor may file a cross-complaint to establish that the claim is a coerced debt.
(b)(1)At least 30 days before commencing an action or filing a cross-complaint described by subdivision (a), the alleged debtor shall provide the alleged creditor with written notice of the intent to file the action or cross-complaint, which shall include a description of claim at issue.
(2)The alleged debtor shall not commence an action or file a cross-complaint described in subdivision (a) if the alleged creditor ceases all efforts to collect on the claim identified in the written notice provided pursuant to paragraph (1) before the expiration of the 30-day period.
(3)For purposes of this subdivision, the 30-day period shall begin to run when the alleged creditor receives the notice provided under paragraph (1).
(c)If the alleged debtor establishes by a preponderance of the evidence in an action brought or cross-complaint filed pursuant to subdivision (a) that the claim is a coerced debt, the court shall award all of the following relief:
(1)A declaratory judgment that the alleged debtor is not obligated to the creditor on the claim.
(2)An injunction prohibiting the creditor from holding or attempting to hold the alleged debtor personally liable on the claim and prohibiting the creditor from enforcing a judgment related to the claim against the alleged debtor.
(3)An order dismissing any cause of action brought by the creditor to enforce or collect on the claim from the alleged debtor.
(d)An alleged debtor who files unmeritorious motions, pleadings, or other papers, conducts unnecessary discovery, or engages in other tactics that are frivolous or solely intended to cause unnecessary delay against an alleged creditor shall be liable for the alleged creditors attorneys fees and costs in defending the lawsuit.
(e)An alleged creditor may collect against any appropriate person or entity other than the alleged debtor.
(f)Information regarding a secured or unsecured consumer debt documented to be a coerced debt shall be deemed incomplete or inaccurate for purposes of subdivision (a) of Section 1785.25.
1798.97.3.A court shall have continuing jurisdiction over an action or cross-complaint filed pursuant to this title in order to provide for the joinder of related causes of action based on the contention that an alleged creditors claim against an alleged debtor is for a coerced debt, and the joinder of further defendants based on the contention that their claims against the alleged debtor are coerced debts, regardless of whether a final judgment has been entered as to any defendant. The courts continuing jurisdiction shall terminate 10 years after filing of the original action unless the court, before that date, finds good cause to extend jurisdiction over the matter.
1798.97.4.An action brought pursuant to this title or any joinder of a defendant pursuant to Section 1798.82 may be brought within four years of the date the alleged debtor knew or, in the exercise of reasonable diligence should have known, of the existence of facts which would give rise to the bringing of the action against, or joinder of, the defendant.
1798.97.5.(a)This title does not apply to a transaction subject to the Song-Beverly Credit Card Act of 1971 (Title 1.3 (commencing with Section 1747)).
(b)A creditor may use all rights and remedies against a person who caused a coerced debt to be incurred or against a person who used or possessed money, goods, services, or property obtained through a coerced debt.
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Date
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Status
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|---|---|
| Sep 30, 2022 | Chaptered by Secretary of State. Chapter 989, Statutes of 2022. |
| Sep 30, 2022 | Approved by the Governor. |
| Sep 6, 2022 | Enrolled and presented to the Governor at 3:30 p.m. |
| Aug 30, 2022 | Assembly amendments concurred in. (Ayes 31. Noes 8. Page 5326.) Ordered to engrossing and enrolling. |
| Aug 30, 2022 | In Senate. Concurrence in Assembly amendments pending. |
| Aug 30, 2022 | Read third time. Passed. Ordered to the Senate. |
| Aug 24, 2022 | Read third time and amended. |
| Aug 16, 2022 | Read second time. Ordered to third reading. |
| Aug 15, 2022 | Read second time and amended. Ordered to second reading. |
| Aug 11, 2022 | From committee: Do pass as amended. (Ayes 12. Noes 3.) (August 11). |
| Aug 3, 2022 | August 3 set for first hearing. Placed on suspense file. |
| Jun 30, 2022 | Read second time and amended. Re-referred to Com. on APPR. |
| Jun 29, 2022 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 9. Noes 1.) (June 28). |
| Jun 23, 2022 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on JUD. |
| Jun 17, 2022 | June 21 hearing postponed by committee. |
| Jun 16, 2022 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on JUD. |
| Jun 9, 2022 | Referred to Com. on JUD. |
| May 25, 2022 | In Assembly. Read first time. Held at Desk. |
| May 24, 2022 | Read third time. Passed. (Ayes 26. Noes 8. Page 3884.) Ordered to the Assembly. |
| May 23, 2022 | Read second time. Ordered to third reading. |
| May 19, 2022 | From committee: Do pass as amended. (Ayes 5. Noes 2. Page 3777.) (May 19). |
| May 17, 2022 | Set for hearing May 19. |
| May 16, 2022 | May 16 hearing: Placed on APPR suspense file. |
| May 6, 2022 | Set for hearing May 16. |
| May 2, 2022 | Read second time and amended. Re-referred to Com. on APPR. |
| Apr 28, 2022 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 9. Noes 2. Page 3513.) (April 26). |
| Apr 18, 2022 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on JUD. |
| Apr 14, 2022 | Set for hearing April 26. |
| Mar 30, 2022 | Set for hearing April 19. |
| Feb 23, 2022 | Referred to Coms. on JUD. and APPR. |
| Feb 11, 2022 | From printer. |
| Feb 10, 2022 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
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Date
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Description
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Location
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Votes
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|---|---|---|---|---|
| Aug 30, 2022 | SB 975 Min Senate Third Reading By Stone | Assembly Floor |
Passed |
|
| Aug 30, 2022 | Unfinished Business SB975 Min Concurrence | Senate Floor |
Passed |
|
| May 24, 2022 | Senate 3rd Reading SB975 Min | Senate Floor |
Passed |
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