Bill H.385 aims to combat coerced debt by prohibiting its incurrence and establishing protections 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. It requires documentation, such as police reports or professional certifications, to support claims of coerced debt. Creditors must cease collection efforts upon receiving a debtor's statement of coerced debt and notify consumer reporting agencies of the dispute, providing written notices in English and Spanish, with potential translations in other languages.

Additionally, the bill establishes that debtors are not liable for coerced debt and can use this as a defense in legal proceedings. It mandates that creditors communicate only using the contact information provided by the debtor and prohibits the disclosure of this information without consent. The bill outlines the process for debtors to establish a prima facie case of coerced debt and the legal remedies available. It also requires credit reporting agencies to reinvestigate and remove verified coerced debts from consumer credit reports and updates the reporting process for unlawful use of personal identifying information. The act is set to take effect on July 1, 2026.

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