Tackling financial abuse.
Written by Jeremy Simon
Art by Ibrahim Rayintakath
Survivors of intimate partner violence may escape injury only to find themselves scarred by financial ruin.
That’s due to a widespread and often unseen form of abuse known as coerced debt, an often dire financial situation in which “the abusive partner incurs debt in the survivor’s name using fraud, duress, or manipulation,” explains Texas Law Professor Angela Littwin. Littwin first coined the term “coerced debt” in a 2012 law review article, but her work on the topic is more than academic. Her groundbreaking research has led to changes in Texas law and is prompting greater awareness in federal bankruptcy systems.
How could somebody end up with debt in their name without their knowledge or consent?
“Coercive control,” explains Littwin. “One partner is essentially trying to undermine the other partner’s free will by controlling every aspect of their life,” Littwin says.
With coerced debt, an abuser might take out a loan, mortgage, or credit card in a partner’s name, force a partner to pay for something they don’t want or max out credit lines, or even steal money from them so they have no choice but to take out loans.
“Once survivors find out about the debt, their credit score may already be wrecked,” says Littwin. With credit scores forming the basis for securing employment, housing, and basic utility services, “[i]n other words, exactly what someone needs if they would like to leave a relationship and start over on their own,” notes Littwin, coerced debt can be a barrier in seeking safety. Littwin’s work is chipping away at the mountain of coerced debt that so many find daunting. She, along with colleagues at Michigan State University, recently completed a five-year study—the first-ever large, federally funded study of its kind—examining coerced debt among women in Texas and Michigan.
Women with coerced debt had lower estimated credit scores compared to women without coerced debt.
The findings? Among the study participants, 17.9% had coerced debt, with unauthorized credit cards accounting for nearly half of that debt. Women with coerced debt had lower estimated credit scores compared to women without coerced debt. The study also found that neither divorce nor traditional debtor-creditor laws provide legal relief from coerced debt.
Thanks to Littwin’s research, that’s beginning to change.
This June, Texas Governor Greg Abbott signed House Bill 4238, a bill on which Littwin testified three times. “With the new law, if somebody has a court order stating that her coerced debts were created via identity theft, creditors must stop collections on those debts,” notes Littwin. While the new law has some exclusions, “the law is, nevertheless, very important,” Littwin says. “The Texas Coalition on Coerced Debt had been trying for a few sessions to get a law passed, so this law is a tremendous step forward.”
Federal bankruptcy protections for coerced debt are not yet as forthcoming. As the U.S. Supreme Court noted in Bartenwerfer v. Buckley (2022), involving a husband’s fraud, “innocent people are sometimes held liable for fraud they did not personally commit, and, if they declare bankruptcy, §523(a)(2)(A) bars discharge of that debt.”
For bankruptcy purposes, Littwin argues, there are two fraud victims—the abused partner and the creditor. If she’s right, just maybe survivors of financial abuse could one day find relief in bankruptcy court, too.