Legislative Council briefs Senate Judiciary on H.385, a bill to bar and remedy 'coerced debt' for survivors

Maria Royal of the Legislative Council walked the Senate Judiciary Committee through H.385 on April 15, describing two substantive pieces: a new subchapter creating protections and remedies for "coerced debt" and separate banking-customer protections. The committee spent most of its time on the civil-legal remedies that would apply when debt is alleged to have been incurred through domestic abuse, human trafficking or the abuse, neglect or exploitation of a vulnerable adult.

Royal told the committee that coerced debt covers secured or unsecured obligations incurred in a debtor’s name through the use of the debtor’s personal information without authorization, or by threat, fraud, force, intimidation, undue influence or similar means. "If one of those individuals has their personal information used either under threat or fraud or unknowingly to incur debt in their name that there would be some protections available to that person," Royal said.

Under the bill, a debtor who files a sworn "statement of coerced debt" plus "adequate documentation" would shift the initial burden: the debtor may establish a prima facie case and the creditor would then have 30 days to investigate and either cease collection and notify credit reporting agencies to remove adverse information, or resume collection (but not sell the debt) if the creditor determines the evidence does not support coerced debt. Royal said the statement must be mailed or transmitted with verifiable tracking and must either be notarized or include self-certifying language under penalty of perjury.

The bill lists three forms of "adequate documentation": a copy of a report filed with federal, state or local law enforcement that identifies the coerced debt and circumstances of its incurrence; a court order finding the debt was coerced; or a sworn certification by a qualified third-party professional (for example, a court officer or law-enforcement personnel, a court-appointed special advocate, a crisis worker employed at a survivor program with relevant training, a licensed attorney, or a Vermont-defined health-care provider) who has met conflict-of-interest rules. Royal cautioned that the bill’s text does not impose a higher evidentiary specificity for a police report beyond what the law-enforcement report itself contains.

A committee member pressed that point, asking, "does this say that a person just has to self-certify that their debt was coerced?" The committee member also asked how substantive a police report would need to be to qualify as "adequate documentation." Royal answered that the bill gives the debtor the option of notarizing the statement or using self-certifying language and that a police report, as written, would qualify under the bill’s plain language; she said she would consult with House colleagues and Michelle Childs about whether practice or other Vermont law requires greater specificity for police reports used as evidence.

If a court later finds debt was coerced, the bill would vacate any prior default judgment against the debtor for that debt and allow the creditor and the debtor to pursue causes of action against the perpetrator for recovery of payments or costs related to the debt. The subchapter would sit under Vermont’s Consumer Protection Act (Title 9), making violations actionable under that statute and subject to attorney-general enforcement and remedies.

The bill also adds protections under Vermont’s Fair Credit Reporting Act so that if coerced-debt reports are made directly to credit reporting agencies, the agencies must reinvestigate and remove adverse information if the debt is found to be coerced. The bill includes confidentiality provisions to protect debtor personal and financial information from public-records requests and allows courts, on motion, to seal records, redact personally identifiable information and hold remote proceedings to protect debtors and their families.

Committee members did not take a vote. One member said they would "speak to the secretary of the Senate and the chairs and see if and when we can recommit this to another committee" and that the committee would take additional testimony before deciding whether to move it forward or refer the banking provisions to Senate Finance. The committee’s next steps were procedural: gather more testimony and determine the appropriate committee referral rather than amend the bill on the spot.

What the committee highlighted as unresolved: the transcript-recorded language does not specify how detailed a police report must be to qualify as "adequate documentation," and committee members asked staff to research whether Vermont practice or statute sets higher documentary standards when police reports are used as evidentiary support. The committee also asked staff to coordinate with House Judiciary and Commerce staff who worked on the House version.

The hearing concluded with no formal action recorded; members agreed to return with additional testimony and to consult with Senate leadership about potential recommitment or referral to Senate Finance.