VT H0385

Prohibits causing another person to incur "coerced debt," defined as debt incurred through unauthorized use of personal information, force, intimidation, fraud, coercion, or economic abuse against survivors of domestic abuse, economic abuse, or human trafficking.

Requires creditors who receive a statement of coerced debt with adequate documentation to cease collection attempts within 10 business days, stop garnishments, return payments made by the debtor, and request deletion of the debt from consumer reporting agencies.

Establishes that debtors are not liable for coerced debt and may raise it as a defense in any legal proceeding; perpetrators of coerced debt become civilly liable to both the creditor and the debtor.

Creates civil penalties for non-compliant creditors of up to $5,000 per violation for individual actions and up to $500,000 for class actions, plus actual damages, attorney's fees, and potential punitive damages for willful violations.

Requires the Attorney General to amend Consumer Protection Rule 104 on Debt Collection by January 1, 2027 and takes effect July 1, 2026.