Senate Finance hears testimony on H.385 to shield coerced-debt victims; vote set for tomorrow

The Senate Finance Committee took up H.385 on Thursday, a bill that would create a legal definition of "coerced debt," offer an accessible process outside court to clear victims' accounts and credit reports, and require supporting documentation before creditors must provide relief. The committee's chair said the bill will be scheduled for a vote tomorrow.

Advocates described how the bill would help vulnerable Vermonters who were manipulated into loans or credit they could not afford. "H.385 does three important things. First, it creates a legal definition of coerced debt that is going to provide much needed clarity to debtors, creditors, and courts," Grace Pazden, director of the Consumer and Homeowner Rights Project at Vermont Legal Aid, told the committee. Pazden recounted a case in which an older, developmentally disabled client co-signed a vehicle loan and was later threatened with a deficiency action for more than $10,000 after the vehicle was repossessed. She said litigation to protect that client took over a year and hundreds of attorney hours.

Supporters said the…