Financial Abuse and Debt: What to Do If Your Partner Forced You to Borrow Money

No one wants to be a victim of financial abuse, but it could happen to anyone. In the aftermath, you might feel ashamed, confused, and afraid, especially if the abuse left you with debt you didn't ask for. 

“Financial abuse debt” or “coerced debt” happens when someone forces you to take out loans or credit cards against your will, or uses your identity to establish credit without your consent. This type of abuse might happen between spouses and romantic partners, family members, or a caregiver and patient. 

The end of an abusive relationship may bring emotional relief, but leave you starting over financially. You may have resources for getting help with the debt or debt relief options if you want to try and settle it.

How Financial Abuse Debt Happens

Coerced debt can happen when an abuser uses threats, intimidation, manipulation, or physical violence to force someone to take out loans or credit cards, or steals their identity to do so. The victim could be legally responsible for the debt since it's in their name, but it's created without their agreement and in some cases, without their knowledge. 

Financial abuse debt is often associated with romantic relationships that involve domestic violence, but this type of debt can happen in other types of relationships. Here are some examples of what financial abuse debt might look like:

• A parent uses their adult child's Social Security number to apply for $50,000 in personal loans, which the parent pockets. The child doesn't find out until they apply for a mortgage and are denied because of bad credit.

• A caregiver withholds food, water, or medication from their elderly patient until the patient agrees to open a home equity line of credit (HELOC) and give them access to the funds. 

• An older sibling uses a secret they know about their younger sibling as leverage to blackmail them into taking out a car loan.

• An abusive spouse secretly takes out $100,000 in business loans in their spouse's name, and defaults on the payments.

• A roommate steals their housemate's credit cards and goes on a shopping spree. When confronted, they threaten the roommate with physical violence. 

Sometimes financial abuse is obvious to the targeted person or to people outside the relationship, and sometimes it's not. Regardless of how financial abuse happens or what exactly it looks like, know that it's not the victim's fault. 

What Are the Consequences of Financial Abuse Debt?

Coerced debt could harm people in several ways. Your credit scores may suffer if the debts go unpaid, either because you can’t pay them or you aren't aware they exist. Creditors could sue for what's owed, and if they win a judgment, your wages or bank account could be garnished to satisfy the debt. 

For some financial abusers, these types of consequences are the goal. In a romantic relationship, for example, an abuser may deliberately attempt to wreck their partner's credit scores or finances so that they feel trapped and don't try to leave the relationship. Coerced debt is a tool to control what their partner can or can't do. 

How to Get Out of Coerced Debt

If you've got financial abuse debt, there may be legal ways to get out of paying. You may be able to dispute the debts under federal law, or challenge them under state laws.

Here's a look at some federal and state protections against coerced debt: 

• Under the Fair Credit Billing Act (FCBA), you have the right to dispute unauthorized charges, including debts you were forced to take out or that someone else took out in your name. 

• The Fair Credit Reporting Act (FCRA) enables disputing inaccurate information on your credit report, including fraudulent debts. Financial abuse debt can be categorized as fraudulent debt if you did not give your consent for the debts to be established in your name.

• New York law prohibits creditors from enforcing debts that occurred as a result of fraud, duress, identity theft, intimidation, threat, force, or exploitation. 

• Under California law, people with financial abuse debt can submit a sworn affidavit to the court to block collection efforts. Blocked debts can't be reported to the credit bureaus. 

• Texas law blocks collection of coerced debts when someone obtains a court order stating that a debt was created through identity theft. 

• North Carolina has proposed legislation that would provide legal protections for victims of domestic violence who incur coerced debt. 

In 2024, the Consumer Financial Protection Bureau (CFPB) discussed a proposed rule that would affect the way financial abuse debt appears on credit reports. However, it doesn't appear to have much traction anymore. 

When you have financial abuse debt, talking to an attorney or debt specialist could help. They may advise you to file an identity theft report with local police and with the Federal Trade Commission (FTC). This creates a paper trail that can prove useful if you dispute the debts under the FCBA and/or the FCRA, or seek a court order to block collection of coerced debts under your state's laws. 

If your state does not have legislation specifically addressing coerced debts, or if disputes don't go in your favor, you may need to consider other options.

Financial Abuse Debt Relief

Debt relief refers to strategies and solutions to help you manage debt during financial hardship. These solutions can include debt management, debt consolidation, debt settlement, and bankruptcy. 

• Debt management plans restructure debts, giving you one monthly payment toward them. If you're eligible, a credit counselor can help you set up a debt management plan and collect the payments each month. Debt management does not reduce the amount you owe. 

• Debt consolidation means combining multiple debts into a single new loan, ideally with a lower interest rate. However, if your credit has suffered because of financial abuse, it may be harder to qualify for a loan.

• Debt settlement involves convincing your creditors to accept less than you owe and forgive the rest of the debt. You might negotiate with your creditors directly, or work with a professional debt settlement company that negotiates for you

• Bankruptcy could discharge unsecured debts in their entirety. A Chapter 7 bankruptcy may be an appropriate solution if you have significant unsecured debt you can't pay, and few or no assets. Consult a bankruptcy attorney if you want to pursue this option.

You didn't ask for financial abuse to happen, and you don't have to figure this out by yourself. A debt expert or attorney can walk you through your options and help you decide which is best for your situation.

You can also look for free or low-cost legal aid to get help from an attorney if you have limited financial resources. And you can contact Freedom Debt Relief for a free consultation by calling 1-800-910-0065 today.