Bill
HB 3352
Victims of coerced debts can file a Statement of Coerced Debt to pause collection and reporting; the debt is not owed and agencies must stop actions and review.
Status & timeline
- Introduced: Feb 25, 2025. Passed both houses May 22, 2025. Sent to Governor June 20, 2025. Governor approved Aug 15, 2025. Effective date: January 1, 2026. Now enacted as Public Act 104-0297.
- Amends the Illinois Collection Agency Act by changing Section 2 (definitions) and adding Section 9.6 (Coerced debt).
Purpose / intent
- To protect consumers who were forced, coerced, or otherwise victimized into incurring debts (including via identity misuse by family/household members, domestic violence, human trafficking, fraud, duress, intimidation, or undue influence) by removing liability for those “coerced debts” and establishing a process for disputing and halting collection activity.
Key definitions
- “Coerced debt”: any debt (except debt secured by real property) incurred because of fraud, duress, intimidation, threat, force, coercion, undue influence, identity misuse within family/household as defined under the Illinois Domestic Violence Act, abuse/exploitation under that Act, or human trafficking as defined in the Criminal Code.
- Other terms defined or clarified include collection agency, debt buyer, debtor, qualified third party, charge-off balance, current balance, etc.
Major provisions / debtor protections
- Debtor liability: A debtor is not liable for coerced debt and may assert that a debt (or part of it) is coerced by submitting a Statement of Coerced Debt.
- Statement requirements: must identify the account, state that the debtor did not authorize use of their information, describe how the debt was incurred (if known), provide preferred or safe contact information (or designate a qualified third party), be supported by at least one form of evidence, and include a signed attestation specified in the statute.
- Acceptable supporting evidence (examples): police report identifying the coerced debt; court order with findings; written verification from a “qualified third party” (e.g., law enforcement, attorney, medical or social service professional, advocate, clergy) verified under 735 ILCS 5/1‑109; or other documents (texts, emails, phone records, orders of protection, etc.).
- Submission methods: statement and supporting materials can be submitted electronically, by certified mail, overnight delivery, online form, or other methods that confirm receipt date.
Duties of collection agencies
- Upon receipt of a complete Statement of Coerced Debt and supporting materials:
- Within 5 days: cease pre-judgment collection activity directed at the debtor (including refraining from filing lawsuits or initiating arbitration) and notify any consumer reporting agency to which adverse information was furnished that the debtor disputes the information.
- Within 90 days: review and consider the submitted information along with the agency’s files and creditor-provided information.
- The Act adds additional procedural duties (e.g., handling incomplete statements) and establishes consequences for noncompliance (affirmative defenses, civil liability), as reflected in the bill summary.
Administrative actions
- Within 180 days after the Act’s effective date, the Department of Financial and Professional Regulation may design and publish a model coerced debt form (English and other languages as appropriate).
Who is affected
- Protected: consumers who are victims of identity misuse, domestic violence, human trafficking, abuse, or other coercion that led to debts.
- Regulated/impacted parties: licensed collection agencies, debt buyers, creditors, consumer reporting agencies, and qualified third‑party service providers (for verification).
- Legal system: creditors and collection agencies will face new procedural requirements and potential affirmative‑defense exposure in collection actions.
Potential impacts
- Provides a formal mechanism to stop collection actions and reporting for alleged coerced debts while claims are investigated.
- Imposes documentation, pause, and review duties on collection agencies and creditors; noncompliance can trigger statutory defenses and liability.
- Aims to reduce retraumatization of victims and limit liability for debt they did not voluntarily incur.
Note: This summary highlights principal elements of the enacted statute; parties should consult the full text (205 ILCS 740/9.6 and related provisions) or legal counsel for compliance and operational details.
Compiled from official sources — confirm details with the bill’s official record.
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