Bill Text: CA SB975 | 2021-2022 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Debt: coerced debts.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2022-09-30 - Chaptered by Secretary of State. Chapter 989, Statutes of 2022. [SB975 Detail]
Download: California-2021-SB975-Amended.html
Bill Title: Debt: coerced debts.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2022-09-30 - Chaptered by Secretary of State. Chapter 989, Statutes of 2022. [SB975 Detail]
Download: California-2021-SB975-Amended.html
Amended
IN
Senate
May 19, 2022 |
Amended
IN
Senate
May 02, 2022 |
Amended
IN
Senate
April 18, 2022 |
CALIFORNIA LEGISLATURE—
2021–2022 REGULAR SESSION
Senate Bill
No. 975
Introduced by Senator Min |
February 10, 2022 |
An act to add Title 1.81.35 (commencing with Section 1798.97.1) to Part 4 of Division 3 of the Civil Code, relating to debt.
LEGISLATIVE COUNSEL'S DIGEST
SB 975, as amended, Min.
Debt: coerced debts: right of action.
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 officer’s 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 creditor’s 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.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
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 individual’s 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:TITLE 1.81.35. Coerced Debt
1798.97.1.
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 debtor’s 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 person’s or entity’s 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, driver’s license number, social security number, email address, social media profile or screen name, place of employment, employee identification number, mother’s 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 creditor’s 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 creditor’s principal place of business as identified by the California Secretary of State. If an address is unavailable through the Secretary of State’s 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 creditor’s attorney’s 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.