N.Y. General Business Law § 604-CC – Coerced debt cause of action and affirmative defense

1. A debtor shall have a cause of action against a creditor in any court having jurisdiction to issue a declaratory judgment establishing that a debt or portion of a debt asserted to be owed to such creditor is a coerced debt. Notwithstanding section one thousand one of the civil practice law and rules, any individual alleged to have caused such coerced debt to be incurred shall not be a necessary party to such action. Such action shall not be commenced and maintained unless the debtor has submitted a request for reconsideration under subdivision four of section six hundred four-bb of this article of the creditor's decision to recommence debt collection activities based on such creditor's review of the debtor's notice of coerced debt and the creditor either affirmed the creditor's determination that the debt is not coerced or the debtor has not received written notice the creditor determined that the debt is coerced debt within thirty-five days of submitting the request for reconsideration.
2. In an action under subdivision one of this section, a debtor shall plead the allegations of coerced debt with particularity and shall attach the documents provided to the creditor pursuant to subdivision one of section six hundred four-bb of this article to any complaint.
3. A debtor who establishes by a preponderance of the evidence in an action pursuant to subdivision one of this section that a debt or portion of a debt asserted to be owed to the creditor is coerced debt shall, unless the creditor provides information that would otherwise show that the determination that the debt was not coerced was the result of the creditor's bona fide error, be entitled to the following relief:
1. (a) a declaratory judgment stating that the debt or portion thereof is coerced debt and that the alleged debtor shall not be liable for such coerced debt;
2. (b) an order enjoining or restraining the creditor from holding or attempting to hold the debtor personally liable for the coerced debt or attempting to obtain or enforce any judgment thereon against such debtor and enjoining and restraining all future collection activities with respect to such debt;
3. (c) an order dismissing any other cause of action brought by the creditor to enforce or collect the coerced debt from the debtor;
4. (d) if the creditor has furnished adverse information to a consumer reporting agency with respect to such coerced debt, an order directing the creditor to notify such agency to delete all such adverse information; and
5. (e) the costs and attorneys' fees reasonably incurred in bringing such action.
4. In any action by a creditor against a debtor to collect a debt, it shall be an affirmative defense to such action that all or a portion of the debt is coerced debt. Providing notice to the creditor under section six hundred four-bb of this article shall not be a prerequisite to asserting such defense; provided, however, the documents described in subdivision one of section six hundred four-bb of this article shall be annexed to the debtor's answer. Notwithstanding section one thousand one of the civil practice law and rules, any individual alleged to have caused such coerced debt to be incurred shall not be or become a necessary party to such action.
5. An action pursuant to subdivision one of this section shall be commenced within three years after the date on which the debtor provided the notice of coerced debt pursuant to section six hundred four-bb of this article to the creditor; provided, however, that if such creditor, its assignor, or any assignee recommences collection activities on the debt after ceasing collection activities on such debt based on such creditor's review of the debtor's claim of coerced debt, such debtor shall have the right to file a subsequent notice of coerced debt pursuant to subdivision six of section six hundred four-bb of this article and the statute of limitations shall commence on the date on which such debtor provided such subsequent notice of coerced debt.
6. If requested by the debtor, the court presiding over any action in which coerced debt is raised as a claim or affirmative defense shall take appropriate steps necessary to prevent abuse of such debtor or an immediate family member of such debtor, including but not limited to the sealing of court records, the redaction of such debtor's or their immediate family member's personal information, and/or directing that any disposition or hearing be held remotely.
7. The provisions of this article shall not be construed so as to prevent a creditor from enforcing any claim or collecting judgment arising out of a lawful debt or portion thereof from any other person or entity other than the coerced debtor.
8. Collection activities, for the purpose of this section, do not include any communication between a creditor or debtor that is required by state or federal law or regulation.