Hochul Pushes to Narrow Domestic Violence ‘Coerced Debt’ Bill

Domestic violence “is something the governor always talks about — that her mother was devoted to helping survivors — so I’m a little surprised about the resistance here,” Rosenthal added.

The bill has received considerable attention from the financial industry. JPMorgan Chase, Capital One and the New York Bankers Association have all lobbied on the bill, records show. Supporters include the New York City Bar Association and groups that advocate for domestic violence victims.

Currently, when victims ask lenders to cancel coerced debt, the lenders frequently require police reports in order to trigger an investigation. Those police reports often aren’t available, advocates say, because coercing someone into debt isn’t necessarily illegal.

The bill requires the lender to cease collection activities and complete a review of a coerced debt claim within thirty business days, if the alleged victim provides a sworn or notarized statement that the debt was coerced. They would also need to provide one of four other types of documentation: a court order; a police report; a notarized statement from a “qualified third party,” such as a social worker, attorney, or member of the clergy; or a Federal Trade Commission identity theft report that identifies a “particular debt, or portion thereof, as coerced debt.”

As of Thursday afternoon, Rosenthal said, Hochul’s office was not objecting to the first three of those documentation options.

But she is pushing to strike the FTC option from the list.

Rosenthal says that’s an important option for victims. “Getting a police report is hard, going to court is hard,” she said. “So we want to offer various pathways, and one is the FTC [report] ... I want to make it as smooth as possible for a victim of coerced debt.”

A Hochul spokesperson said only that the governor is reviewing the legislation.

Under existing state law, FTC reports are treated as a valid form of proof for cases of identity theft.

Some members of the business-friendly Assembly Republican conference raised objections to the coerced debt bill during floor debate in June. Assemblymember John Mikulin cited the risk that individuals who are not survivors could “lie and say they were abused” and use a “false affidavit” to escape debts they legitimately owe.

“It seems to me that this bill does create a one-sided process, with the presumption being in favor of the debtor,” Mikulin said.

Lauren Schuster, vice president of government affairs at the Urban Resource Institute, which works with domestic abuse survivors, said she was “surprised” by the difficulty of the negotiation. (Schuster previously worked as Rosenthal’s chief of staff.)

“These institutions, they’re multibillion-dollar institutions in annual revenue, and they are going up against survivors who cannot leave abusive situations because of $2,500 in debt,” Schuster said. “The disparity is so, so clear here.”