On August 18, Illinois enacted HB 3352, amending the state’s Collection Agency Act to add Section 9.6 and establish that “a debtor is not liable for any coerced debt.” The law defines “coerced debt” as debt incurred through “fraud, duress, intimidation, threat, force, coercion, undue influence, or the non-consensual use of the debtor’s personal identifying information,” including abuse, exploitation or human trafficking.

Under the new section, a debtor may assert a debt is coerced by submitting a “statement of coerced debt” to a collection agency with supporting documentation, such as a police report, court order or verification from a qualified third party. Upon receiving a complete statement of coerced debt, collection agencies must pause all pre-judgment collection efforts and notify consumer reporting agencies that the debt is disputed. The law sets deadlines for agency response and review, and outlines procedures for incomplete statements.

After reviewing the statement and supporting documentation, if the agency finds the debt is coerced, it must cease collection activities and request debt removal from consumer reports. If not, it must provide the debtor with a written explanation and supporting evidence before resuming collection. Finally, HB 3352 outlines penalties for noncompliance, making a collection agency liable for whichever is greater: actual damages or up to $2,500 per debt, plus court costs and attorney’s fees. The law prohibits waiving rights under this section.