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Was your Debt Coerced? New Law Allows Debt to be Voided if it was Coerced

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A new California law governing “coerced debt” will soon be taking effect on July 1 2023. A “Coerced debt” is defined as:

“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”. Cal. Civ. Code § 1798.97.1(d)

The law requires a creditor/collector/claimant to cease collection activities until the claimant completes the review required by the legislation. The debtor must provide adequate documentation AND a sworn written certification that some or all of the debt being collected is coerced debt. Cal. Civ. Code § 1798.97.2(b).

The law also prohibits 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. Cal. Civ. Code § 1798.97.2(a).

Because of this new law, a debtor can bring an independent action or file a cross-complaint against a claimant to establish that a particular debt, or portion thereof, is coerced debt. Cal. Civ. Code § 1798.97.3. If a debtor establishes the debt was coerced, they will be entitled to relief such as an injunction prohibiting the claimant from holding or attempting to hold the debtor personally liable on the debt, or portion thereof, that is coerced debt, or from enforcing a judgment related to the debt, or portion thereof, that is coerced debt against the debtor. Cal. Civ. Code § 1798.97.3(b).

In addition, the court will be required to issue a judgment in favor of the claimant against the person who coerced the debtor into incurring the debt. Cal. Civ. Code § 1798.97.3(c) assuming that person “has been brought within the jurisdiction of the court and joined as a party to the action” and “the evidence supports such a judgment”.

The law will apply only to debts incurred on or after July 1, 2023, but does allow a debtor to file a cross-complaint in an action to collect a debt incurred before that date, unless a final judgment has been entered into that action. Cal. Civ. Code § 1798.97.5. This law does not apply to secured debts. Cal. Civ. Code § 1798.97.4(a).

Fitzgerald & Campbell, APLC represents consumers and small business with difficult debt problems with Debt Settlement, Judgment Contests, Settlements, and Liens, Debt Collection Harassment, Debtor Protection, Collection Lawsuit Defense, and Bankruptcy. We offer various services to assist you in dealing with different debts.

For a free consultation, call/text to (855) 709-5788 or contact us online today.

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