New California law to protect debtors - AB 1243 - What is it?

Starting from January 1, 2023, a new law called California AB 1243 will be put into effect in California, to help protect elder and dependent adults from financial abuse. This law allows judges to issue restraining orders against financial abuse, and to determine whether specific debts were the result of coerced debt. This means that people who have been financially abused will now have an additional tool to dispute debts with creditors, collectors, and credit reporting agencies.

In the past, elder and dependent adults who have been financially abused may have struggled to dispute debts that were incurred as a result of coercion or undue influence. AB 1243 addresses this issue by giving these individuals the ability to obtain restraining orders against financial abuse, which can include a finding that specific debts are the result of coerced debt and therefore invalid.

Under AB 1243, a restraining order is issued by a judge if they find that an elder or dependent adult has been subjected to financial abuse. The order can require the abuser to stop any financial abuse, including attempts to collect on debts that were the result of coercion. The order can also require the abuser to return any property that was taken as a result of financial abuse.

To obtain a restraining order under AB 1243, an elder or dependent adult must file a petition with the court. The petition must include a statement of the facts supporting the claim of financial abuse, including any coerced debt. The petition must also include a description of any property that was taken as a result of financial abuse and a request for a restraining order.

Once the petition is filed, the court will set a hearing date. The abuser must be served with a copy of the petition and notice of the hearing. At the hearing, the judge will hear evidence from both sides and make a determination as to whether the elder or dependent adult was subject to financial abuse, including coerced debt. If the judge finds in favor of the petitioner, they will issue a restraining order.

It is important to note that the restraining order does not automatically discharge the debt. Instead, it provides the debtor with an additional tool to dispute the debt with creditors, collectors, and credit reporting agencies. The debtor can use the finding of the court to challenge the validity of the debt and may be able to have it discharged if it was found to be the result of coercion.

Anyone who has been a victim of financial abuse should consider seeking the protection of this law and perhaps consulting with an attorney if they believe the financial crimes are major. It will remain to be seen how the protection will actually work, and only time will tell as people start using it to dispute debts.

You can read the full text of the order here https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB1243