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Vermont Legislature Debating Consumer Protection Bill That Would Increase Requirements When Filing Legal Actions

The Vermont State Legislature is considering a bill that would, among other things, halve the statute of limitations to three years and prohibit the collection of time-barred debts.

The bill would also impose a number of additional restrictions on collectors filing legal actions to collect on unpaid debts, and give individuals the opportunity to protect their funds from being seized via judgments, in certain circumstances.

The bill, H.482, is being sponsored by Rep. William Botzow, a Democrat, and Rep. Michael Marcotte, a Republican.

Collectors would be required to send individuals a notice at least 30 days in advance of filing a legal action. The notice would include a number of requirements, such as

  • The name of the collector
  • The name of the creditor
  • The date of default
  • The balance at the time of default
  • The current balance
  • A statement indicating the right for the collector to file the action, and
  • a “Declaration of Inability to Pay” form, which would protect funds from being seized via a judgment. Those funds include: income from Social Security, Veteran’s Administration, Unemployment Insurance, or Worker’s Compensation, if the individual’s wages are less than the hourly minimum wage in Vermont multiplied by 40 hours, and “after reasonable expenses to maintain food, shelter, and medical care for yourself and your dependents, you have no money left to pay this debt.”

When filing a legal action to collect on a debt, collectors would have to provide a number of items in the complaint, including:

  • Certifying it sent the “Declaration of Inability to Pay” form
  • Include a signed copy of that form

Collectors would, at the time of trial, also have to supply:

  • How much simple interest would accrue on the judgment at a rate of 12% per year
  • the monthly payment necessary to pay off the debt and interest within 96 months
  • the total amount to be paid over the 96-month period

Plaintiffs would also be responsible for notifying defendants before filing a motion for financial disclosure or wage assignment.

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