An act relating to remedies and protections for victims of coerced debt

The definition of 'debtor' changed: the passed version covers survivors of domestic abuse, economic abuse, or human trafficking; the enacted version covers survivors of domestic abuse or human trafficking, or vulnerable adults who are survivors of abuse, neglect, or exploitation. Economic abuse is no longer a standalone qualifying condition.

The definition of 'coerced debt' was restructured. The passed version includes 'economic abuse perpetrated against the debtor' as a basis for coerced debt; the enacted version replaces this with 'abuse, neglect, or exploitation of a vulnerable adult.' The enacted version also adds a requirement that the debt not be subject to a prior final judgment in a dissolution or collection matter.

The definition of 'qualified third-party professional' changed. The passed version lists officers of the court or law enforcement, licensed staff of assistance programs, and licensed attorneys or health care providers. The enacted version adds court-appointed special advocates and crisis workers (as defined in 12 V.S.A. section 1614) employed at programs assisting survivors.

Documentation requirements were narrowed. The passed version accepts five types of adequate documentation (police report, FTC identity theft report, court order, sworn certification, or any other supporting document). The enacted version accepts only three: a law enforcement report, a court order, or a sworn certification from a qualified third-party professional.

The form of the debtor's statement changed significantly. The passed version allows an oral or written statement with no notarization requirement. The enacted version requires a sworn written statement sent by certified mail (or similar tracked mail), which must be notarized or include a specific declaration language under penalty of perjury.

The creditor response process changed. The passed version requires creditors to cease all collection within 10 business days of receiving both a statement and adequate documentation. The enacted version gives creditors 10 business days for an initial response (cease collection, notify debtor, notify credit agencies) followed by a 30-day investigation period (extendable by 15 days) before making a final determination on whether the debt is coerced.

The enacted version adds a 'Violations' section (2495e) that makes knowing and material violations of the subchapter an unfair and deceptive act in trade under 9 V.S.A. section 2453, and grants the Attorney General authority to make rules, conduct investigations, enter assurances of discontinuance, and bring civil actions.

The enacted version adds a confidentiality provision stating that records containing financial or personally identifiable information related to a coerced debt claim are exempt from public inspection under Vermont's Public Records Act.

The enacted version adds a six-year statute of limitations for creditor actions against perpetrators, running from the date the creditor received the debtor's statement and documentation or notice of the perpetrator's identity, whichever is later.

The passed version includes a section requiring the Attorney General to amend Consumer Protection Rule 104 on Debt Collection by January 1, 2027 to conform with the new subchapter. This section does not appear in the enacted version.

The passed version includes a section (amending 9 V.S.A. section 2480k) requiring law enforcement agencies to accept complaints about unlawful use of personal identifying information and provide complainants with a copy, officer name, and case number. This section does not appear in the enacted version.

The definition of 'coerced debt' was narrowed to require that the debt resulted from domestic abuse, human trafficking, or the abuse, neglect, or exploitation of a vulnerable adult. The House version's standalone 'economic abuse' prong was removed.

Mortgage loans (as defined in 8 V.S.A. section 2101(15)) and commercial loans (as defined in 8 V.S.A. section 2101(2)) are now explicitly excluded from the definition of coerced debt.

The House version's Section 4, which amended 9 V.S.A. section 2480k regarding complaints to law enforcement agencies about unlawful use of personal identifying information, was removed in the enacted version.

The definition of 'debtor' was restructured. The House version required a survivor of domestic abuse, economic abuse, or human trafficking. The enacted version requires a survivor of domestic abuse or human trafficking, OR a vulnerable adult who is a survivor of abuse, neglect, or exploitation.

The definition of 'adequate documentation' was narrowed from five options to three. The FTC identity theft report option and the catch-all 'any other document' provision were removed. The law enforcement report option now requires that filing the report subjects the filer to criminal penalties for false information.

The 'statement of coerced debt' must now be a sworn written statement provided by mail to the creditor, and must be notarized or include specific perjury language. The House version allowed oral statements.

The creditor response process was restructured. The House version required creditors to cease all collection within 10 business days upon receiving a statement plus adequate documentation. The enacted version gives creditors an initial 10-business-day response period followed by a 30-day investigation period (extendable by 15 days) to make a determination.

A new provision addresses coerced debt secured by tangible personal property: creditors retain the right to enforce a security interest under UCC Article 9 upon default, but are prohibited from collecting or seeking any deficiency from the victim of coerced debt.

The definition of 'qualified third-party professional' was changed: court-appointed special advocates were added, the crisis worker category was narrowed to those employed at programs assisting survivors of domestic violence, sexual assault, stalking, human trafficking, or abuse of children (removing older adults and dependent adults), and the categories were reorganized.

Records containing financial or personally identifiable information related to a claim of coerced debt are now explicitly exempt from public inspection under Vermont's Public Records Act.

The enforcement framework was restructured. The House version included specific statutory damages ($5,000 per violation indexed for inflation, $500,000 class action cap). The enacted version ties violations to the unfair and deceptive trade practices statute (section 2453) and gives the Attorney General authority to make rules, conduct investigations, enter assurances of discontinuance, and bring civil actions.

The House version's Section 2, which required the Attorney General to amend Consumer Protection Rule 104 on Debt Collection by January 1, 2027, was removed in the enacted version.

The definition of 'coerced debt' is expanded to include debts incurred through 'economic abuse perpetrated against the debtor,' a newly defined term covering control or restriction of a person's access to money, assets, credit, financial information, ability to work, and undue influence over financial decisions. The previous exclusions for mortgage loans (8 V.S.A. 2101(15)) and commercial loans (8 V.S.A. 2101(2)) are removed, meaning the bill now potentially covers those loan types as well.

The official version adds a requirement that for a debt to qualify as coerced debt, it 'was not subject to a final judgment in an action for dissolution of marriage or a collection matter that occurred prior to the debtor requesting the creditor to cease all collection efforts.' This creates a temporal limitation not present in the unofficial version.

The definition of 'debtor' is changed from requiring a person to be a survivor of domestic abuse or human trafficking OR a vulnerable adult survivor of abuse/neglect/exploitation, to requiring a person to be a survivor of 'domestic abuse, economic abuse, or human trafficking' AND owe coerced debt. This removes the separate vulnerable adult pathway and adds economic abuse as a qualifying basis.

The definition of 'adequate documentation' is significantly broadened. The unofficial version required one of three specific items (law enforcement report, court order, or sworn certification). The official version lists five options including FTC identity theft reports and adds a catch-all: 'any other document that demonstrates a person was subject to coerced debt and that supports a debtor's statement of coerced debt.'

The definition of 'qualified third-party professional' is revised. The unofficial version listed court-appointed special advocates and crisis workers (as defined in 12 V.S.A. 1614(a)(1)). The official version replaces these with 'a licensed staff member of a program that provides assistance to persons regarding domestic violence, sexual assault, stalking, human trafficking or abuse of children, older adults, or dependent adults,' and consolidates attorneys and health care providers into a single category.

A 'statement of coerced debt' no longer needs to be sent by mail or notarized. The official version allows the statement to be made 'orally or in writing,' removing both the mailing requirement and the notarization/penalty-of-perjury language that was required in the unofficial version.

The creditor response framework is restructured into a tiered system. If a debtor provides only a statement without adequate documentation, the creditor must notify consumer reporting agencies within 30 business days and inform the debtor within 5 business days of what additional information is needed. If both a statement and adequate documentation are provided, the creditor must within 10 business days cease all collection, refrain from filing lawsuits, cease garnishment, return garnished payments, notify the debtor, contact credit reporting agencies to delete information, and refrain from selling or transferring the debt.

The unofficial version's 30-day creditor investigation period (extendable by 15 days) and the requirement for the creditor to make a written determination within 5 business days of completing that investigation are removed from the official version. The official version instead relies on the court process in section 2495d(b) where a creditor with a good faith basis can seek a court order declaring the debt is not coerced.

New language requires all written notices under section 2495c to be provided in both English and Spanish. If a creditor communicates with a debtor in another language, the required notice must be provided in the debtor's preferred language. The Commissioner of Financial Regulation is directed to publish Model Form A-1 in English and Spanish, with discretion to add other languages.

A new damages provision is added in section 2495d(f). A creditor who fails to comply with section 2495c is liable for actual damages plus additional damages of up to $5,000 per violation (indexed annually for inflation) in individual actions. For class actions, the cap is the lesser of $500,000 (indexed) or 1% of the debt collector's net worth, plus court costs and reasonable attorney's fees. Punitive damages are available if noncompliance was willful.

A new Section 2 requires the Attorney General to amend Vermont's Consumer Protection Rule 104 on Debt Collection by January 1, 2027, to ensure debt collection practices conform with the new subchapter.

The unofficial version's Section 2495e ('Violations') made knowing and material violations an unfair and deceptive act under section 2453 and gave the Attorney General specific enforcement authority. The official version replaces this with a much shorter 'Creditor Remedies' section that simply states nothing in the subchapter diminishes a creditor's right to seek payment recovery from the perpetrator, shifting enforcement emphasis to the new private damages remedy.

The definition of coerced debt was restructured. The introduced version covered debt incurred through unauthorized use of personal information, force/intimidation/coercion, or economic abuse, with an exclusion for debts subject to prior final judgments in divorce or collection matters. The passed version ties coerced debt specifically to domestic abuse, human trafficking, or abuse/neglect/exploitation of a vulnerable adult, and adds explicit exclusions for mortgage loans (8 V.S.A. 2101(15)) and commercial loans (8 V.S.A. 2101(2)).

The standalone definition of 'economic abuse' (covering withholding money, interfering with work, exerting undue influence over financial decisions) was removed entirely from the passed version.

Qualified third-party professional was expanded to include court-appointed special advocates (CASAs) and crisis workers as defined in 12 V.S.A. 1614(a)(1), while adding a 'no conflict of interest' requirement. The introduced version referenced 'licensed staff member of a program' more broadly.

Debtor eligibility expanded: the introduced version covered survivors of domestic abuse, economic abuse, or human trafficking. The passed version covers survivors of domestic abuse or human trafficking, plus vulnerable adults who are survivors of abuse, neglect, or exploitation as defined under 33 V.S.A. chapter 69.

Adequate documentation was narrowed from five categories (police report, FTC identity theft report, court order, third-party certification, or any other supporting document) to three (law enforcement report, court order finding the debt was coerced, or sworn certification from a qualified third-party professional). The FTC identity theft report and the catch-all 'any other document' option were removed.

The statement of coerced debt must now be a sworn written statement sent by mail (certified mail, IMb Tracing, or electronic transmission with verifiable tracking) and must be notarized or include specific perjury language. The introduced version allowed oral or written statements without these formalities.

A new provision allows creditors to enforce security interests (repossession, surrender, court-ordered seizure) on coerced debt secured by tangible personal property under the Uniform Commercial Code, but prohibits collecting any deficiency from the victim.

Civil remedies were restructured: the passed version explicitly states that if a debtor establishes a prima facie case, the burden shifts to the creditor to prove by a preponderance of evidence that the debt is not coerced. It also adds that courts shall vacate prior default judgments, and that a perpetrator is not a necessary party to creditor-debtor actions (though findings are not binding on non-parties).

Creditor response timelines were restructured: the passed version requires creditors to cease collection within 10 business days of receiving a statement plus documentation, complete investigation within 30 days (extendable by 15 days for supplementary information), and notify the debtor of the determination within 5 business days. The introduced version used 30 business days for credit reporting notification and 10 business days for collection cessation.

Statutes of limitations were added: a debtor has six years from discovery (or cessation of coercion) to sue a perpetrator, and a creditor has six years from receiving the statement or notice of perpetrator identity to sue a perpetrator.

The introduced version included detailed creditor penalty provisions (actual damages, up to $5,000 per violation indexed for inflation, class action caps of $500,000 or 1% of net worth, punitive damages for willful noncompliance). The passed version replaces these with a general provision that knowingly and materially violating the subchapter constitutes an unfair and deceptive act in trade and commerce under section 2453, enforceable by the Attorney General.

A new confidentiality section (2495f) was added, protecting financial and personally identifying information shared by debtors, preserving privilege protections, and exempting records from Vermont's Public Records Act (with the exemption not subject to 1 V.S.A. 317(e)).

Section 2 of the introduced bill, which required the Attorney General to amend Consumer Protection Rule 104 on Debt Collection by January 1, 2027 to conform with the new subchapter, was removed from the passed version.

The credit reporting agency section (9 V.S.A. 2480d) was retitled to include 'Coerced Debt' in its heading, indicating additional provisions for coerced debt disputes in the credit reporting context (diff truncated before full text visible).