Bill H.385 aims to combat coerced debt by prohibiting its incurrence and providing protections and remedies for victims. It introduces a new subchapter titled "Coerced Debt" under 9 V.S.A. chapter 63, defining key terms such as "coerced debt," "debtor," and "creditor." The bill outlines specific circumstances that classify debt as coerced, including unauthorized use of personal information and economic abuse, and specifies the documentation required to support claims, such as police reports or certifications from qualified professionals.

The bill mandates that creditors must cease collection efforts upon receiving a debtor's statement of coerced debt and notify consumer reporting agencies of the dispute. Creditors are required to communicate in both English and Spanish and must inform debtors of any additional information needed. It establishes that debtors are not liable for coerced debts and can use this as a defense in legal proceedings. The bill also places the burden of proof on creditors to seek a court order to declare a debt as not coerced and provides civil remedies for debtors for noncompliance. Additionally, it amends laws related to credit reporting agencies, requiring them to reinvestigate and remove verified coerced debts from credit reports. The bill is set to take effect on July 1, 2026, with the Attorney General tasked to amend debt collection rules by January 1, 2027.

Statutes affected:
As Introduced: 9-2480d, 9-2480k