Bill > H0385

This bill establishes comprehensive protections for victims of coerced debt in Vermont, defining coerced debt as financial obligations incurred through abuse, fraud, intimidation, or economic control without the debtor's genuine consent. The legislation creates a detailed framework for victims to dispute and potentially eliminate debt that was fraudulently or coercively obtained, such as by an abusive partner who uses the victim's personal information without permission or forces them to take on financial obligations through threats or manipulation. Creditors are required to take specific actions when a debtor claims coerced debt, including ceasing collection efforts, stopping garnishments, returning payments, and removing negative credit reporting within 10 business days of receiving adequate documentation. The bill provides multiple ways to prove coerced debt, such as police reports, court orders, or sworn statements from qualified professionals like counselors, attorneys, or healthcare providers. If a creditor fails to comply with these requirements, they can be held liable for damages up to $5,000 per violation. The legislation also protects the debtor's safety by allowing court records to be sealed and personally identifiable information to be redacted during legal proceedings. The law will take effect on July 1, 2026, and the Attorney General is tasked with updating debt collection rules to align with these new protections.

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https://legislature.vermont.gov/bill/status/2026/H.385