Coerced Debt [Effective July 1, 2028]

V.S.A. tit. 9, ch. 63, subch. 13

in effect

9 V.S.A. § 2495a Definitions [Effective July 1, 2028]

2495a. Definitions [Effective July 1, 2028] As used in this subchapter: (1) “Adequate documentation” means at least one of the following: (A) a copy of a report filed with a federal, state, or local law enforcement agency that identifies the coerced debt and the circumstances under which the coerced debt was incurred, the filing of which subjects the person filing the report to criminal penalties for filing false information if, in fact, the information in the report is false; (B) a court order finding that the debt was coerced; or (C) a sworn certification from a qualified third-party professional regarding the debtor’s claim of coerced debt. (2) “Coerced debt” means all or a portion of secured or unsecured debt solely or jointly in a debtor’s name that: (A) was incurred as a result of domestic abuse, human trafficking, or the abuse, neglect, or exploitation of a vulnerable adult and the perpetrator’s: (i) use of the debtor’s personal information without the debtor’s knowledge, authorization, or consent; or (ii) use or threat of force, intimidation, undue influence, fraud, deception, coercion, or other similar means against the debtor; (B) is not a mortgage loan as defined in 8 V.S.A. § 2101(15); and (C) is not a commercial loan as defined in 8 V.S.A. § 2101(2). (3) “Creditor” means a person, or the person’s successor, assignee, or agent, claiming to own or have the right to collect a debt owed by the debtor. (4) “Debtor” means a person who: (A) owes coerced debt; and (B) is a survivor of domestic abuse or human trafficking; or (C) is a vulnerable adult who is a survivor of abuse, neglect, or exploitation as those terms are defined under 33 V.S.A. chapter 69. (5) “Domestic abuse” has the same meaning as abuse in 15 V.S.A. § 1101(1). (6) “Future abuse” means abuse as defined in 15 V.S.A. § 1101(1), except that the abuse need not occur between family or household members. (7) “Good faith” has the same meaning as provided in 9A V.S.A. § 1—201(b)(20). (8) “Human trafficking” has the same meaning as in 13 V.S.A. § 2652 or 2653. (9) “Perpetrator of coerced debt” or “perpetrator” means an individual who causes or is alleged to have caused coerced debt to be incurred by another. (10) “Qualified third-party professional” means any of the following individuals who do not have a conflict of interest: (A) an officer of the court or law enforcement personnel; (B) a court-appointed special advocate; (C) a crisis worker as defined in 12 V.S.A. § 1614(a)(1) employed at a program that assists survivors of domestic violence, sexual assault, stalking, human trafficking, or abuse of children, and who has relevant training or expertise; (D) a licensed attorney; or (E) a health care provider as defined in 18 V.S.A. § 9402(7). (11)(A) “Statement of coerced debt” means a sworn written statement by a debtor provided by mail to a creditor that includes the following information: (i) identification of the debt, or portion of the debt, alleged to be coerced debt; (ii) if available, a description of the circumstances under which the coerced debt was allegedly incurred; (iii) a statement by the debtor disclosing that the debtor did not willingly authorize the use of the debtor’s name or personal information to incur such debt; (iv) any information known by the debtor, including account information or credit card information and, if applicable, the name of any other individual in whose name such debt was jointly incurred; (v) the identity of and contact information for the perpetrator, if known, unless the debtor signs a sworn statement that disclosing such information is likely to result in future abuse to the debtor or to a member of the debtor’s immediate family; (vi) the debtor’s preferred language and contact method and information such as a telephone number, email address, physical address, or safe address for either the debtor or a third party whom the debtor designates to receive information about the coerced debt, which shall be specified by the debtor; and (vii) any other documents the debtor deems appropriate to support the statement. (B) As used in subdivision (A) of this subdivision (11), “mail” means certified mail, certificate of mailing, or any other similar first-class mail tracking method used or approved by the U.S. Postal Service, including Intelligent Mail barcode Tracing (IMb Tracing). The term also includes any electronic or digital transmission that provides a verifiable date, timestamp, or tracking capability. (C) A statement of coerced debt shall be notarized or shall include the following language inserted above the debtor’s signature and date: “I declare that the above statement is true and accurate to the best of my knowledge and belief. I understand that if the above statement is false, I will be subject to the penalty of perjury or to other sanctions in the discretion of the court.” (12) “Sworn certification” means a written statement by a qualified third-party professional in the following form: CERTIFICATION OF QUALIFIED THIRD-PARTY PROFESSIONAL I,....................................... (name of qualified third-party professional), do hereby certify under penalty of perjury as follows: 1. I am a qualified third-party professional as defined in 9 V.S.A. § 2495a(10) who has had in-person contact or face-to-face contact through an electronic medium with ....................................... (name of debtor). 2. Based on my professional interactions with the debtor and information presented to me in my professional capacity, I have a reasonable basis to believe ....................................... (name of debtor) is a survivor of domestic abuse or human trafficking or is a vulnerable adult who is a survivor of abuse, neglect, or exploitation, and has incurred all or a portion of debt that is coerced debt. 3. Based on my professional interactions with the debtor and on information presented to me, I have reason to believe that the circumstances under which the coerced debt was incurred are as follows: 4. The following debts or portions of the debts have been identified to me as coerced: I attest that the foregoing is true and correct. (Printed name of qualified third-party professional) (Signature of qualified third-party professional) (Business address and business telephone) (Date) Added 2025, No. 106 (Adj. Sess.), § 1, eff. July 1, 2028.

9 V.S.A. § 2495b Coerced debt prohibited [Effective July 1, 2028]

2495b. Coerced debt prohibited [Effective July 1, 2028] A person shall not cause another person to incur coerced debt. Substantiated coerced debt is not enforceable against the debtor. Added 2025, No. 106 (Adj. Sess.), § 1, eff. July 1, 2028.

9 V.S.A. § 2495c Creditor’s conduct pursuant to a debtor’s statement of coerced debt [Effective July 1, 2028]

2495c. Creditor’s conduct pursuant to a debtor’s statement of coerced debt [Effective July 1, 2028] (a) Within 10 business days following receipt of a debtor’s statement of coerced debt and adequate documentation, a creditor shall: (1) cease all collection activities and refrain from selling, assigning, or otherwise transferring for consideration such debt; (2) notify the debtor it has ceased all collection activities pending further review of the claim; and (3) notify any credit reporting agency to which it furnished adverse information about such debt that the debtor disputes the accuracy of the adverse information. (b) If a debtor notifies a creditor that a particular debt being collected, or a portion thereof, is coerced debt, but does not provide all the information required under subsection (a) of this section or provides such notice orally, and if such creditor does not cease such collection activities, then within 10 business days after receipt of the debtor’s notice of the coerced debt, the creditor shall inform the debtor that additional written information is required and shall provide the debtor with Model Form A-1, as described in subsection (g) of this section. (c)(1) Within 30 days following receipt of a debtor’s statement of coerced debt and adequate documentation, the creditor shall complete a reasonable investigation of the disputed information, which shall include a review of all information provided by the debtor and any other relevant information available to the creditor and, upon completion of the investigation, make a determination as to the accuracy of the debtor’s claim of coerced debt. (2) The 30-day period described in subdivision (1) of this subsection may be extended for up to an additional 15 days if the creditor receives supplementary information from the debtor during that 30-day period that is relevant to the investigation. (d) Within five business days after making a determination under subsection (c) of this section, the creditor shall notify the debtor of such determination in writing and shall provide a good faith basis for the determination. The notice shall not include personally identifiable information of another person. If the creditor: (1) determines the disputed debt is coerced debt, the creditor shall notify the debtor that it is ceasing collection activities and contact any consumer reporting agencies to which it furnished adverse information about the debtor’s coerced debt and request that such information be deleted from the debtor’s file and credit report; or (2) determines the available information does not establish that the disputed debt is coerced debt, the creditor may recommence collection activities; however, the creditor is prohibited from selling, assigning, or otherwise transferring such debt. (e) All communications from the creditor to a debtor under this section shall be made using only the debtor’s preferred contact method and, in addition, the creditor shall make reasonable efforts to use the debtor’s preferred language as identified in the debtor’s statement of coerced debt. (f) In connection with a statement of coerced debt, the creditor: (1) shall not disclose the contact information the debtor provides in the statement of coerced debt to any other person, including the perpetrator or joint account holders, without the debtor’s express written authorization, unless directed or authorized to do so by court order; and (2) may request that the debtor provide the identity of and contact information for the perpetrator, if known, unless the debtor signs a sworn statement that disclosing such information is likely to result in abuse to the debtor or to a member of the debtor’s immediate family. (g) Model Form A-1 shall be developed by the Commissioner of Financial Regulation, posted in English and Spanish on a publicly accessible website maintained by the Department of Financial Regulation, and substantially in the following form: MODEL FORM A-1 FOR CREDITORS TO PROVIDE TO DEBTORS [Creditor name: Address: Email address: Telephone number: Website URL where this form can be filled out online] [Debtor’s name] [Debtor’s preferred contact information: debtor may provide a telephone number, email address, physical address, or the address of a third party] [Debtor’s preferred language] You have given us information about a debt that may have been taken out because someone used your personal information without your permission or because someone intimidated, threatened, forced, or manipulated you into taking out this debt. For example, an abusive partner could have taken out a credit card or loan in your name without your knowledge or permission or pressured you into taking out credit to buy a car, television, computer, or other item and threatened you with harm if you refused. Questions: To temporarily or permanently stop collection of this debt, you need to answer the questions below. If you do not know the answer, you can explain why you do not know the answer. 1. Did you sign for or agree to the debt? 2. If you did sign for or agree to the debt, was it because someone threatened you or used intimidation, force, manipulation, theft, or other forms of control to take out the debt in your name? If yes, please describe how it happened. 3. If you did not sign for or agree to the debt, do you know who used your information to take out the debt? If yes, please describe. 4. What is your preferred contact method and contact information? You can provide a telephone number, email address, physical address, safe address, or the contact information of another trusted person you want to receive information for you because you are concerned about your safety. Supporting Documentation: Please include at least one of the documents below that show that the debt was taken out by someone who threatened you or used intimidation, force, manipulation, theft, or other forms of control to take out the debt in your name. You only need to send one, but you may provide more than one. 1. A copy of a report filed with a federal, state, or local law enforcement agency that identifies the coerced debt and the circumstances under which the coerced debt was incurred, the filing of which subjects the person filing the report to criminal penalties for filing false information if, in fact, the information in the report is false; 2. A court order finding that the debt was coerced; or 3. A sworn certification from a qualified third-party professional you talked with about this debt. The statement should include who the person is, where the person works, the person’s contact information, and information you shared with the person about the debt and how it was taken out. The third party may be: (a) an officer of the court or law enforcement personnel; (b) a court-appointed special advocate; (c) a crisis worker as defined in 12 V.S.A. § 1614(a)(1) employed at a program that assists survivors of domestic violence, sexual assault, stalking, human trafficking, or abuse of children, and who has relevant training or expertise; (d) a licensed attorney; or (e) a health care provider as defined in 18 V.S.A. § 9402(7). In addition to the required documentation, you may include any other document [such as a divorce decree, restraining order, protection from abuse order or another document] that includes information about the debt and how it was taken out. We need to receive your answers to the above questions and at least one document supporting your claim before we stop collecting on the debt. Within 30 days after we receive this information, we will do all of the following: 1. Notify you in writing that we are stopping all attempts to collect the debt from you, pending our review of your claim. 2. Review your claim and make a determination as to whether you should be relieved from liability for the coerced debt. 3. Contact the consumer reporting agencies to which we gave information about you and the coerced debt and request that they remove the information from your file and credit report. Alternatively, we also have the right to challenge your claim of coerced debt in court, subject to legal protections for victims of coerced debt. Your statement of coerced debt must be notarized or certified as true and accurate by you under penalty of perjury. If you have questions, please contact us at: [creditor’s name, mailing address, telephone number, and email address]. If you prefer to communicate with us by email, please confirm with us by telephone our correct email address for submitting information about the debt so we can ensure a timely response. For more information, see 9 V.S.A. chapter 63, subchapter 13. (h) With respect to coerced debt secured by tangible personal property, nothing in this subchapter shall affect a creditor’s right to enforce a security interest upon default under 9A V.S.A. Article 9 (Uniform Commercial Code - Secured Transactions), including repossession, surrender, or court-ordered seizure of the subject collateral. However, a creditor is prohibited from collecting or seeking to collect any deficiency from the victim of coerced debt. Added 2025, No. 106 (Adj. Sess.), § 1, eff. July 1, 2028.

9 V.S.A. § 2495d Civil legal remedies [Effective July 1, 2028]

2495d. Civil legal remedies [Effective July 1, 2028] (a)(1) A debtor shall not be liable to a creditor for coerced debt. (2) In any action initiated by a creditor to seek collection of a debt from a debtor, the debtor may establish a prima facie case that the debt is coerced debt by submitting a statement of coerced debt and adequate documentation. If the debtor establishes a prima facie case of coerced debt, the creditor shall bear the burden of proving, by a preponderance of the evidence, that the debt is not coerced debt. (b) If a court finds a debt is coerced debt: (1) the court shall vacate any previous default judgment issued against the debtor on the coerced debt; (2) the creditor shall have a cause of action against the perpetrator; and (3) the debtor shall have a cause of action against the perpetrator for any payments made or costs incurred by the debtor in connection with the coerced debt. (c) This section shall not be construed to limit or infringe upon any other rights or remedies available under common law or any other provision of law or rule. (d) If a debtor signs a sworn statement that disclosing the identity of and contact information for the perpetrator is likely to result in future abuse to the debtor or a member of the debtor’s immediate family, the creditor may file a motion requesting a hearing to determine the danger of future abuse to the debtor or to a member of the debtor’s immediate family. The debtor shall bear the burden of proving by a preponderance of the evidence that, if the debtor discloses the identity of and contact information for the perpetrator, the perpetrator poses a danger of future abuse to the debtor or to a member of the debtor’s immediate family. If the court finds that the debtor meets this burden, the debtor shall not be required to disclose the information. If the debtor does not meet this burden, the court shall order the debtor to disclose the identity of and, if known, the contact information of the perpetrator. (e) In any action involving an alleged coerced debt, upon motion of the debtor, the court may seal court records in accordance with Rule 9 of the Vermont Rules for Public Access to Court Records, redact personally identifiable information, or direct that any deposition or evidentiary hearing be conducted remotely to protect the debtor or a member of the debtor’s immediate family from a perpetrator. A debtor seeking a relief from abuse order or an order against stalking or sexual assault shall do so in accordance with 15 V.S.A. chapter 21 or 12 V.S.A. chapter 178, respectively. (f) The provisions of this subchapter apply in any action brought in a court of this State, notwithstanding a contractual choice-of-law provision. (g) Nothing in this subchapter shall be construed to preclude a creditor from seeking recourse under applicable law for a claim of coerced debt that is knowingly and materially false. (h) A perpetrator shall not be a necessary party to an action between a creditor and a debtor under this subchapter. However, no finding in such an action shall be binding on a person who was not a party to the action. (i) An action by a debtor against a perpetrator shall be commenced within six years after the date the debtor discovered or reasonably should have discovered the coerced debt or within six years after the coercion or abuse giving rise to the debt ceased, whichever is later. (j) An action by a creditor against a perpetrator shall be commenced within six years after the date the creditor received the debtor’s statement of coerced debt and adequate documentation or received notice of the identity of the perpetrator, whichever is later. Added 2025, No. 106 (Adj. Sess.), § 1, eff. July 1, 2028.

9 V.S.A. § 2495e Violations [Effective July 1, 2028]

2495e. Violations [Effective July 1, 2028] (a) A person who knowingly and materially violates this subchapter commits an unfair and deceptive act in trade and commerce in violation of section 2453 of this title. (b) The Attorney General has the same authority to make rules, conduct civil investigations, enter into assurances of discontinuance, and bring civil actions as provided under subchapter 1 of this chapter. Added 2025, No. 106 (Adj. Sess.), § 1, eff. July 1, 2028.

9 V.S.A. § 2495f Confidentiality [Effective July 1, 2028]

2495f. Confidentiality [Effective July 1, 2028] (a) Except as otherwise expressly provided in this subchapter or required by law, any financial and personally identifying information related to a claim of coerced debt that is shared by a debtor pursuant to the provisions of this subchapter shall not be disclosed by the recipient without the express consent of the debtor, unless such disclosure is authorized by court order. (b) Information or material that is subject to privilege protections under federal or state law that is shared by the debtor pursuant to the provisions of this subchapter shall not be disclosed by the recipient, unless the debtor expressly waives the privilege, or the privilege is waived by an express provision of law. (c) Any record or information produced or acquired by a public body pursuant to the provisions of this subchapter that contains financial or personally identifiable information related to a claim of coerced debt shall be kept confidential and shall be exempt from public inspection or copying under Vermont’s Public Records Act. This exemption shall not be subject to 1 V.S.A. § 317(e). Added 2025, No. 106 (Adj. Sess.), § 1, eff. July 1, 2028.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/09/063Fetched: 10/21/2026