Coerced Debt: What Divorce Professionals Need to Know About Proposed Changes for Victims of Domestic Financial Abuse

By Kristen Shearin, JD, CDFA® On 12/27/2024

The Consumer Financial Protection Bureau (CFPB) has issued an advance notice of proposed rulemaking that could bring critical changes for survivors of domestic financial abuse, particularly concerning coerced debt. This proposal presents an opportunity to enhance protections for victims, and as divorce professionals, it’s essential to stay informed on these developments as they may directly impact your practice.

Overview of the CFPB’s Notice

The CFPB is seeking public input on potential amendments to the Fair Credit Reporting Act (FCRA) that would address coerced debt. Specifically, the proposal suggests revising the definitions of "identity theft" and "identity theft report" to include situations where debts have been incurred without the consumer’s effective consent, such as in cases of coercion within domestic abuse.

The proposed changes would provide victims of coerced debt the ability to block certain credit information and prevent consumer reporting agencies (CRAs) from denying this request. This would offer significant relief to survivors of domestic abuse who are burdened by debts they were forced to incur.

Key Changes Proposed in the Petition

The Center for Survivor Agency and Justice petitioned the CFPB to amend Regulation V, and the key proposed changes include:

Redefining "identity theft" to encompass situations where debts are incurred without effective consent, offering specific protection to individuals with coerced debt.
Modifying "identity theft report" to reflect the expanded definition, enabling victims of coerced debt to access protections under the FCRA.
Blocking coerced debt information under the FCRA, allowing individuals to remove negative credit information linked to coerced debt.
Prohibiting CRAs from refusing requests to block information related to coerced debt.

Research highlighted in the petition shows that between 94% and 99% of survivors of intimate partner violence experience economic abuse, including coerced debt. This form of abuse not only jeopardizes a victim's financial well-being but also often forces them to remain in unhealthy relationships longer, further compounding their suffering (National Consumer Law Center, 2024).

CFPB Director’s Statement

“People trapped by domestic abuse must often sign documents under the threat of violence, ruining their financial lives and making it even more difficult to escape,” said CFPB Director Rohit Chopra. “Expanding identity theft protections could help survivors rebuild their financial lives and would ensure that our credit reporting system is not used as a tool for domestic and elder abuse” (Consumer Financial Protection Bureau, 2024).

Questions for Public Comment

The CFPB is requesting input on several key areas, including:

Prevalence and Harm: What data exists on the extent of coerced debt and its impact on survivors? How does the current credit reporting system contribute to or reduce harm?
Existing Protections: What protections exist for victims of economic abuse under federal or state law? What barriers prevent survivors from accessing these protections?
Credit Risk Assessment: Does coerced debt impact the survivor’s credit risk, independent of the abuser?
Costs and Benefits: What are the costs and benefits of the proposed amendments?
Definition of Coerced Debt: The petition defines "coerced debt" as “all non-consensual, credit-related transactions that occur in a relationship where one person uses coercive control to dominate the other.” Should the CFPB consider alternative definitions?
Documentation Requirements: What documentation should victims be required to provide to demonstrate coerced debt?

General vs. Specific Protections: Should protections be general for all coerced debt or focus on victims of domestic violence specifically?

Why Divorce Professionals Should Care

As a divorce professional, this proposed rule is more than just a legal update—it has the potential to fundamentally change how financial abuse, particularly coerced debt, is handled in divorce proceedings.

Survivors of domestic abuse often find themselves financially trapped, with debts they were forced to take on without consent. Under the new proposed rules, these individuals would have a clearer path to remove coerced debts from their credit reports, providing them with an opportunity to rebuild their financial lives after the relationship ends.

Here’s how this rule could impact your work:

Identifying Financial Abuse: Divorce professionals, especially attorneys and financial advisors, need to be vigilant in recognizing coerced debt during divorce proceedings. This may involve identifying debts that were incurred under duress, without the spouse’s consent, or through coercion.
Impact on Property Division: With the expansion of identity theft protections to include coerced debt, it’s possible that courts may begin to consider coerced debt more heavily in property division decisions. As a result, it may become increasingly important to work with Certified Divorce Financial Analysts (CDFAs) to assess the impact of these debts on marital estates.

Incorporating Coerced Debt into Divorce Strategy: Divorce attorneys may need to adjust their strategies to ensure that survivors of domestic financial abuse are not held liable for debts incurred through coercion. This could involve presenting evidence of financial control during divorce proceedings to secure a fair property division outcome.

How to Submit Comments

The CFPB is actively seeking input from a variety of stakeholders, including divorce professionals, advocates, and survivors of coerced debt. If you’d like to contribute your perspective, comments can be submitted through the following methods:

Federal eRulemaking Portal: Regulations.gov (Search for Docket No. CFPB-2024-0057).
Email: ANPR-Coerced-Debt@cfpb.gov. (Include Docket No. CFPB-2024-0057 in the subject line).
Mail/Hand Delivery/Courier: Comment Intake—Identity Theft and Coerced Debt
c/o Legal Division Docket Manager
Consumer Financial Protection Bureau
1700 G Street NW
Washington, DC 20552

All submissions, including supporting materials, will become part of the public record and are subject to disclosure. When submitting comments, it’s important to avoid including sensitive personal information such as account numbers or Social Security numbers. The deadline for submitting comments is March 7, 2025.

A Call to Action for Divorce Professionals

As professionals who deal with the complexities of divorce, you have unique insight and the opportunity to help shape the future of the divorce process—especially for those impacted by financial abuse. By staying informed about these proposed rule changes and participating in the public comment process, you can help create a more equitable system.

Citations:

Consumer Financial Protection Bureau. (2024). Advance Notice of Proposed Rulemaking: Identity Theft and Coerced Debt. Retrieved from https://www.regulations.gov

National Consumer Law Center. (2024). Petition for Rulemaking to Amend Identity Theft Definitions in the Fair Credit Reporting Act (Regulation V). Retrieved from https://www.regulations.gov

Tagged with: idfa, divorce, cdfa, cfpb, domestic financial abuse, financial abuse, coerced debt, debt

Blog Disclaimer: The opinions expressed within these blog posts are solely the author’s and do not reflect the opinions and beliefs of the Certitrek, IDFA or its affiliates.