Effective January 1, 2025, a new law has passed in the State of Connecticut that affects collections and can potentially affect foreclosure actions in Connecticut.
The State of Connecticut Judicial Branch has created and made available a Notice of Coerced Debt Review form. The Notice was created to address Connecticut General Statues §36a-649, et. seq.
The legislative history of §36a-649 provides that the purpose of the statutes is “to prohibit an individual to cause another to incur a coerced debt by establishing procedures to review documentation to determine whether a debt is coerced and bring an action to establish whether debt is coerced debt.” Connecticut Joint Favorable Committee Report, SB. 123, 3/25/2024.
The purpose of this new law is to combat financial abuse.
“Coerced debt” is defined as “any debt incurred in the name of a debtor who is a victim of domestic violence…when such debt was incurred in response to any duress, intimidation, threat of force, force or undue influence used to specifically coerce the debtor into incurring such debt.” The statute does further define debt as “an unsecured credit card debt or any portion of an unsecured credit card debt.”
A mere two months into the new year, we have seen a number of Notices of Coerced Debt Review in foreclosure actions by self-represented parties.
Under the statutory scheme, once a party files a notice of Coerced Debt Review, the plaintiff must suspend all collection activities concerning that debt for sixty days or until it completes its review and investigation to determine whether the debt at issue is coerced debt as defined by the statute, whichever is later. The statues also require the debtor to provide the claimant with detailed information and documentation as provided in Connecticut General Statues 36a-651.
This statute does not apply to foreclosure actions in Connecticut because a mortgage is a secured debt and not unsecured credit card debt. Foreclosing plaintiffs are well served in filing a Motion to Strike any such notice in a Connecticut foreclosure action so as not to delay the timelines.
For those creditors collecting on unsecured credit card debt, or any debt within the meaning of this statute, it is imperative that you have an established procedure to undertake and document proper review and investigation of the file to determine whether the debt at issue is a coerced debt under the statute.
For more information, contact Vincent J. Averaimo or your Barton Gilman attorney.
