VermontSuperiorCourtFilegl01/02_4Wmdsormt

### VERMONTSUPERIOR

### COURT

## CIVILDIVISIONWindsor

### UnitCase

### No.

### 23-SC-0234312

### TheGreen

### Woodstock

## VT05091

### 802-457-2121WWW.Vermontjudiciary.org

### K?£3?

### Commissioner

### ofLabor,State

### ofVermont

### PlaintiffV.

### CoreyGreene

### Defendant

### Decisionon

### MotionforInstallment

### JudgmentInthis

### small-claimscollectionaction,defendantansweredthe

### complaint

### byadmittingthatheowesthedebtand

### byaskingto

### paythe

### judgment

### inmonthlyinstallments

### of$40.

### Thecourtresponded—as

### ithasdone

### inothercases,e.g.,

### CapitalOne,

### N.A.v.

### Chase,

### No.

### 23-SC-01658,2023

## WL7309302

### (Vt.Super.

### Ct.Oct.18,

### 2023)(Corbett,

### .)—byissuinganentryordertothe

### effectthatthecourt

### wouldnotorderinstallmentpayments

### without

### firstensuringthatdefendanthad

### receivednotice

### ofthedebtorexemptionsthat

### maybe

### available.

### Thecourt

### maileddefendant

### copy

### ofthe

### list

### ofexemptionsanddisclosureform,andindicatedthatit

### would

### reviewthestipulationafterdefendant

### acknowledgedreceipt

### ofthe

### listandreturnedthedisclosure.Inresponse,

### plaintifffiledrevisedstipulationin

### whichthepartiesagreedthat

### judgmentshouldbeentered

### for

### plaintiff,andthatdefendantshouldbeorderedto

### paymonthlyinstallments

### of$160.

### Plaintiffreferenced

### defendant’s

### abilityto

### paythisincreasedamount,butdidnotindicatewhetherdefendant

### receivedthe

### list

### ofexemptionsthathadbeen

### mailed

### bythecourt.

### Plaintiffalso

### filedmotion

### objectingtothe

### court’sentryorder.

### Plaintiffarguedthatdisclosure

### oftheexemptionswasnotrequired,andthatthe

### court’sentryorderwasnotconsistent

### withcurrentstatewidepractices.

### Plaintiff’smotion

### providesthecourt

### withanopportunityto

### explainitsapproachtotheseissues,andto

### clarifytheprocedures

### itintendsto

### followin

### similarcases.

### Thecourt’sfocusisonthepractice

### ofinstallmentjudgments.

### Thisisblendedprocedurethat

### isavailableunderthe

### Vermont

### Small

### ClaimsProcedure

### Rules,and

### whichincludescomponents

### ofboth

### judgmentand

### collection.Inthe

### followingparagraphs,thecourtdescribestheproceduralprotectionsthat

### applytoeach

### oftheseparatecomponents,andthen

### identifiesthebasis

### foritsconcernthatcurrentpracticessurroundingtheblendedprocedurearenotadequatelyprotectingthedue-processinterests

### ofsmall-claimsdefendants.OrderPageof23-SC-02343CommissionerofLabor,StateofVermontv.CoreyGreeneOrder Page 2 of 7

23-SC-02343 Commissioner of Labor, State of Vermont v. Corey Greene 

### The first component involves the merits determination. In small-claims court, the merits of the

case are established either when the defendant fails to answer the complaint and is defaulted, the

defendant answers the complaint by admitting the debt in full, or the court makes factual findings by a

preponderance of the evidence presented at a merits hearing. Vt. R. Small Claims P. 3(d)(1), 3(e)(1), &

6(a). The merits are expressed in a judgment order in the form of the amount of money that the

defendant owes to the plaintiff, including “the principal amount found to be due, all interest accrued on

that amount up to and including the date of entry of judgment, and all costs allowed to the prevailing

party.” Vt. R. Civ. P. 54(a); Vt. R. Small Claims P. 6(e); 12 V.S.A. § 5531(b). In other words, the

merits determination establishes whether the defendant owes money to the plaintiff, and if so, how

much. The merits determination does not result in any special instructions regarding how the money

will be collected.

The second component involves collection, meaning the court procedures that are available to

assist a plaintiff in collecting a judgment. In small-claims court, a plaintiff may seek court-ordered

enforcement of a judgment by obtaining a writ of execution to seize the defendant’s property, Vt. R.

Small Claims P. 9(b), by seeking trustee process against the defendant’s assets or wages, Vt. R. Small

Claims P. 9(a), or by seeking a financial disclosure hearing at which the defendant may be ordered to

“make such payments as are deemed appropriate.” Vt. R. Small Claims P. 7(c); 12 V.S.A. § 5537(b).

For each of these procedures, there are additional rules that plaintiffs must follow, and additional

findings that must be made by the court before the request is granted. A requirement common to each

of these methods is that the defendant must receive notice of the available debtor exemptions before

enforcement occurs.

The debtor exemptions are a collection of statutes that protect certain assets and income

streams from collection. The exemptions are established by the Legislature, and are meant to ensure

that debtors are not forced into “total poverty,” and that public-assistance benefits are used for their

intended purposes of shelter and basic sustenance rather than for the repayment of debt. In re

Riendeau , 293 B.R. 832, 835 (D. Vt. 2002); Lynch, Vermont’s New Debtor’s Exemption Statute, 13

Vt. L. Rev. 609, 611–12 (1989). Included within the exemptions are rules that protect some of a

debtor’s assets, and rules that protect a debtor’s income if they receive certain public benefits from

DCF and DVHA like food stamps or fuel assistance, or if they receive social-security payments or

disability payments. 12 V.S.A. § 2740; 12 V.S.A. § 3170; 27 V.S.A. § 101.

It is typically the defendant’s burden to show that they are entitled to an exemption. In order to

safeguard against the risk of erroneous deprivation, due process requires that defendants be provided

with notice of the exemptions and an opportunity to be heard in connection with a court-ordered

enforcement of a judgment. McCahey v. L.P. Investors , 774 F.2d 543, 548 (2d Cir. 1985); Dionne v.

Bouley , 757 F.2d 1344, 1350–51 (1st Cir. 1985); Finberg v. Sullivan , 634 F.2d 50, 56–57 (3d Cir.

1980) (en banc); Strickland v. Alexander , 153 F.Supp.3d 1397, 1406–09 (N.D. Ga. 2015).

Vermont courts have effectuated these requirements by preparing a list of the most-common

debtor exemptions, together with a disclosure form, and by requiring through procedural rules that

defendants receive a copy of the list before the court orders collection. For example, in cases where a

plaintiff seeks a financial disclosure hearing, the court sends the list of exemptions and a disclosure

form to the defendant before the hearing occurs. Vt. R. Small Claims P. 7(b)(1). At the hearing, the

court considers evidence about the defendant’s financial circumstances, and any exemptions asserted

by the defendant, and may issue an order requiring the defendant to “make such payments as areOrder Page 3 of 7

23-SC-02343 Commissioner of Labor, State of Vermont v. Corey Greene 

### deemed appropriate” if the court finds that the judgment has remained unpaid for more than 30 days

and that: (1) the defendant has received notice of the exemptions that are available by law, (2) the

defendant has not shown the right to any exemption, and (3) the defendant has the ability to make the

payments. Vt. R. Small Claims P. 7(c)(1). This is a commonly-used procedure.

An installment judgment is also a commonly-used procedure, which allows the small-claims

court to issue a judgment that both identifies the amount of money owed and also includes “a provision

allowing payment of the judgment in specified installments.” Vt. R. Small Claims P. 6(e). In other

words, the procedure streamlines the otherwise two-step process of the merits determination and the

financial disclosure hearing, consistent with the goal of small-claims procedures that are “simple,

informal, and inexpensive.” 12 V.S.A. § 5531(a). However, even though the “simple” procedure

blends the components of judgment and collection, the small-claims rules do not specify whether

installment judgments must follow the rules that pertain to both components. As described in more

detail below, current practices follow some of the rules, but not all of them. The court’s assessment is

that the current practices are too informal, and are not sufficient to safeguard against the risk of

erroneous deprivation. Mathews v. Eldridge , 424 U.S. 319, 334–35 (1976); McCahey , 774 F.2d at 548.

In particular, there is a practice in which installment judgments are ordered on the basis of the

pleadings, without any court hearing ever taking place. The practice is not codified in any rule, but it

transpires in the following manner. A defendant who has been sued in small-claims court receives a

copy of the complaint and summons, along with a blank answer form and a page of instructions. The

instructions are written by the court, and are on court letterhead. The instructions tell the defendant that

they have been sued, and provide the defendant with information about their options. The first option

described is that the defendant can “agree” that they “owe the money.” If the defendant agrees with

this statement, they are instructed to check the corresponding box on the answer form and send

payment directly to the plaintiff. The second option described is for defendants who agree that they

owe the money, but “cannot pay it all at this time.” These defendants are instructed to check the box on

the answer form that “requests an installment judgment” and to “indicate the amount of money that

you can pay, as well as the pay period and start date for any payments.” The instructions note that the

payment schedule must be “reasonable,” that it is subject to the approval of the court, and that a

plaintiff may object to the payment schedule and request a hearing. The third option described is for

defendants who disagree that they owe the money requested in the complaint: they are instructed to

check the box that requests a hearing, and to list their reasons why they deny the claim.

In other words, the instructions convey the impression that a defendant’s options are to admit

the debt and pay immediately, admit the debt and make payments according to a schedule, or deny that

they owe the debt. The instructions do not ask a defendant simply to admit or deny the allegations in

the complaint, which is all that would be needed to facilitate the merits determination. Instead, the

small-claims instructions go further, and ask an admitting defendant to choose between the options of

paying immediately or paying according to a schedule. In this regard, the instructions take on the

additional role of asking the defendant to choose between methods of collection. It may be efficient

and expedient to broach this topic in the instructions, but if the court is going to ask small-claims

defendants to make choices about collection as part of their answer, then the court is responsible for

providing defendants with enough information to make the choice a meaningful one. In particular, the

court should provide defendants with notice of the available exemptions.Order Page 4 of 7

23-SC-02343 Commissioner of Labor, State of Vermont v. Corey Greene 

### The instructions provide some information about debtor exemptions, but the information is

opaque, and the explanation is not adequate. Defendants are told that if they “think” that some or all of

their income “may be exempt from collection,” they should check a corresponding box on the answer

form and send a disclosure form to the court. Defendants are not told what it means for income to be

exempt from collection, nor what the available exemptions are, nor how any of this might relate to a

payment schedule or to their obligation to pay immediately if judgment is entered. Defendants do not

receive either the actual list of exemptions or the disclosure form. Instead, a defendant who wants to

read the list of exemptions or obtain a copy of the disclosure form is directed to the front page of the

Vermont Judiciary website, without any information about how to navigate the website to find either

the list of exemptions or the disclosure form. The website is not intuitive. The court’s concern is that

the instructions prompt small-claims defendants to make choices about collection, but do not provide

information about available exemptions in a meaningful way.

In order to evaluate the reasonableness of its concern, the court decided to survey existing cases

in which this practice was followed. The court began with a set of 945 small-claims cases, representing

all of the small-claims cases that were filed over a recent six-month interval. Using various tools in the

court’s case-management software, the court then identified 124 cases within that set in which (1) the

cause of action involved the collection of consumer debt and (2) the defendant responded to the

complaint by admitting that they owed all the money requested in the complaint, and by requesting a

payment schedule. * 

### The court then read all 124 of these cases.

In selecting these cases, the court intended to focus upon the situation where a defendant

defaulted on a small amount of credit-card debt (typically between $2,000 and $3,000), and where the

defendant also indicated that they could not pay this amount immediately. The court’s hypothesis was

that a substantial percentage of these defendants should be eligible for at least one of the available

exemptions, such as by receiving public-assistance benefits, social-security payments, or disability

payments. The court therefore expected to see many instances of defendants admitting the debt,

requesting payment schedules, and also indicating eligibility for exemptions. Instead, what the court

found was that only 11 of the 124 defendants who requested a payment schedule in small-claims

consumer-debt cases also checked the box to indicate that some or all of their income may be exempt.

In other words, either the court’s hypothesis was wrong, or the current instructions do not provide

defendants with enough information to know whether or not they may be eligible for an exemption, or

why they should check the box if they are.

The court then considered its own experiences. As referenced above, several months ago, the

undersigned started providing defendants with a copy of the list of exemptions and a disclosure form

whenever they answered a small-claims complaint by admitting the debt and requesting a payment

schedule. So far, the court has sent these materials to seven small-claims defendants in consumer-debt

cases, none of whom had checked the box to indicate any eligibility for an exemption. Of those seven

defendants, two have not responded to the court’s entry order, but the remaining five have all returned

a disclosure form that indicates (contrary to their answer) that some or all of their income is indeed

exempt, either due to the receipt of public benefits from DCF or DVHA, or because they received

* There were an additional 27 cases in which a defendant responded to the complaint by admitting that they owed

the money requested in the complaint, and by requesting a payment schedule, but the cause of action was something other

than the collection of consumer debt. The present case is among these 27, because it does not involve consumer debt.

However, the same fundamental conclusions apply. Overall, more than 15% of the cases in the court’s sample involved

defendants who answered the complaint by requesting a payment schedule.Order Page 5 of 7

23-SC-02343 Commissioner of Labor, State of Vermont v. Corey Greene 

### social-security payments or disability payments. In other words, either this small sample size has

produced an anomalous result, or defendants provide different answers about their eligibility for

exemptions depending upon whether they receive the current instructions or instead receive an actual

copy of the list of exemptions and a disclosure form.

The court’s conclusion is that the current instructions do not provide defendants with

meaningful information at a meaningful time. Small-claims defendants are asked to self-select whether

the court should order them to make payments to the plaintiff according to a schedule, but the

instructions do not provide them with enough information to understand whether they are eligible for

exemptions, how the exemptions might relate to their decision about whether to pay the debt

immediately or request a payment schedule, or whether the court will consider this information when

deciding whether to order installment payments. In other words, the current procedures create a risk of

erroneous deprivation. Mathews , 424 U.S. at 333–35.

The court also concludes that additional information would improve the quality of its decisionmaking. Most of the defendants who received an actual copy of the list of exemptions responded by

completing the disclosure form, and they provided the court with valuable information about whether

to approve the proposed payment schedule. The question therefore becomes how best to provide this

information to defendants, and how to manage the cases in which the defendant does not respond.

At the oversight level, the rules could be amended to require small-claims plaintiffs to send a

list of exemptions and a disclosure form along with the complaint, or the list and disclosure form could

be included as an appendix to the instructions. The instructions themselves could provide a better

explanation of what the exemptions mean, and how they relate to the decision about whether to send

payment directly to the plaintiff or request a payment schedule. The rules could also be amended to

clarify the factors that a court must consider before deciding whether to approve an installment

judgment.

In the meantime, in cases where the defendant answers the small-claims complaint by admitting

the debt and requesting a payment schedule, this court will respond by issuing a brief entry order that

explains the issue, and by mailing the entry order to the defendant along with a list of exemptions and a

disclosure form. The defendant will be asked to return the disclosure form within 30 days. The court

will thereafter review any responsive disclosure and decide whether to order payments, taking into

consideration (1) whether the defendant has acknowledged receipt of the list of exemptions, (2)

whether the defendant has shown the right to any exemption, (3) whether the defendant has the present

ability to make payments, and (4) whether the proposed payment schedule is reasonable. These

considerations track the findings that a court must make when deciding whether to order payments

following a financial disclosure hearing. Vt. R. Small Claims P. 7(c)(1).

If the defendant has admitted the debt, requested a reasonable payment schedule, and submitted

a disclosure form that indicates that they are not eligible for any exemption, the court will probably

conclude in most cases that the required findings can be made, and that a judgment should be entered

along with an order for the requested installment payments. This would still facilitate the small-claims

goal of a streamlined, blended procedure. But if the defendant submits a disclosure form that indicates

that they receive public-assistance benefits or are otherwise eligible for an exemption, or if the

defendant does not return the disclosure form, the court will not order payments. Instead, the court will

review the complaint and answer, and will determine whether judgment should be entered for theOrder Page 6 of 7

23-SC-02343 Commissioner of Labor, State of Vermont v. Corey Greene 

### plaintiff based upon the pleadings. This would still be an efficient merits determination, but it would

also protect debtors from erroneous deprivation and ensure that public-assistance benefits are not being

diverted to the repayment of debt. A defendant may always choose to make payments to the plaintiff if

they wish, and a plaintiff may always challenge the determination or otherwise seek court-ordered

payments by filing a post-judgment motion for financial disclosure under Vermont Small Claims

Procedure Rule 7.

In the court’s view, these procedures reduce the risk that a court will erroneously order a

defendant to pay a plaintiff with exempt income. These procedures also harmonize the practices of

installment judgments and financial disclosure hearings, and ensure that court-ordered payments

follow the same basic rules regardless of when the payments are ordered.

Plaintiff criticizes this approach as inconsistent with statewide practice. However, the point of

this opinion is that current statewide practices would benefit from change. Moreover, the court’s

survey revealed that courts throughout the state are already considering these issues. It is true that

installment judgments are almost always approved without further hearing in cases where the

defendant requests a reasonable payment schedule and does not check the box to indicate eligibility for

an exemption. But outcomes were varied in the cases where defendants indicated eligibility for an

exemption: some courts still approved an installment judgment without further hearing, but others

declined to order payments, or made modifications to the terms of the payment schedule, or set the

matter for a hearing. Similar variations emerged in cases where the defendant requested to pay only a

few dollars per month towards the satisfaction of the judgment, or otherwise indicated that their

income was limited or fixed. In other words, courts are already reviewing requests for installment

judgments by considering whether the defendant is eligible for exemptions, whether the defendant has

the ability to pay, and whether the proposed payment schedule is reasonable. The problem is not that

courts are unconcerned with these issues, but that existing procedures do not provide either defendants

or the courts with enough information to safeguard against the risk of erroneous deprivation.

Plaintiff also criticizes the court’s analogy between installment payments and financial

disclosure hearings, because financial disclosure hearings are a post-judgment procedure, whereas

installment payments are incorporated within the judgment itself. In response to this criticism, the

court returns to one of its original points, which is that an installment judgment is a unique procedure

that blends the traditional functions of judgment and collection within one document. A blended

procedure can be efficient, but it still needs to incorporate the protections of all of its components. A

court-ordered payment is a court-ordered payment regardless of whether the payment was included

within the judgment or was instead ordered following a post-judgment financial disclosure hearing. A

defendant who is ordered to pay a plaintiff a certain amount every month must pay the plaintiff that

amount every month regardless of whether the payment was ordered within the judgment or was

instead ordered following a post-judgment hearing. The same considerations should apply at both

times. If anything, the court’s sensitivity to the risk of erroneous deprivation should be heightened

when the court includes an order to pay within the judgment, because the order in most cases is being

made with less information than in the post-judgment context, and without the benefit of an evidentiary

hearing. Mathews , 424 U.S. at 333–35.

### Plaintiffalsoarguesthatpaymentschedulesarenot

### collectionmechanismat

### all.

### Plaintiffcharacterizespaymentschedulesinsteadastype

### offorbearance,in

### whichthedefendantagreestomakepayments

### inexchange

### forsomeform

### ofconsiderationfromthe

### plaintiff,suchas

### forgiveness

### ofpost-judgmentinterest,oranagreementnottoseekimmediateexecution

### ofthe

### judgment.

### Languagetothis

### effectcanbefoundinmanystipulations.

### Nothingaboutthis

### decisionpreventspartiesfromenteringinto

### privateforbearanceagreements,butthereisdifferencebetween

### privateagreementandcourtordertomakepayments.

### Fundamentally,thecourtfinds

### it

### difficulttointerpretcourt-orderedpaymentsas

### anythingotherthancourt-ordered

### collectionmechanism.

### The124cases

### reviewed

### bythecourtresultedin

### judgmentstotalingmorethan

### $300,000andcourt-orderedpayments

### exceeding

### $15,000permonth.

### Theaveragedefendantwasorderedto

### payabout

### $150permonth

### forperiod

### ofabouteighteenmonths.

## Allofthese

### monthlypaymentswereordered

### bythecourt,andthisprocessis

### beingused

### inabout15%

### ofall

### small-claimscases.Inthe

### court’s

### View,thisisanenforcementmechanism,and

### commonly-usedoneatthat.

### Plaintifffinallycontendsthatthe

### risk

### oferroneous

### deprivationisoverstated,becausethenotice

### ofexemptions

### isprovidedlaterintheeventthatthedefendantfaltersontheirpaymentscheduleandadditional

### collectionmethodsaresought.

### However,latenoticeisnot

### sufficient:theinformationisneededwhenthedefendantdecidestorequestpaymentschedule,andwhenthecourtdecideswhethertoapproveit.

### None

### ofthe124cases

### reviewed

### bythecourt

### involvedadditional

### collectionefforts—in

### all

### ofthecasessurveyed

### bythecourt,theinstallmentpaymentswerethe

### onlymethod

### ofcollectionundertakensofar.laternotice

### wouldnothelp

### any

### ofthedefendants

### who

### followthe

### court’sorderto

### paythe

### plaintiffaccordingtotheterms

### oftheschedule,and

### wouldbe

### oflittlesolacetodefendantwhowaserroneously

### impoverishedinthemeantime,ortotaxpayers

### whose

### public-assistancedollarswereerroneouslydivertedtotherepayment

### ofdebt.

### Forthesereasons,thecourt

### willtypicallyfollowtheaboveproceduresin

### small-claimscaseswherethedefendantanswersthe

### complaint

### byadmittingthedebtandrequestingpaymentschedule.Inthiscase,thecourthasalreadysentthe

### list

### ofexemptionstothedefendant,

### along

### withthedisclosureform.

### Thecourt

### willallow30daysfromthefile-stampeddate

### ofthisorder

### within

### whichforthedefendanttocompletetheformandreturnthedisclosuretothecourt.

### Thecourt

### willthereafterdecidewhethertoapprovetherequestforaninstallment

### judgmentorder

### accordingtothecriteriaoutlined

### inthisopinion.Inthemeantime,

## ifthereareanyquestions,eitherparty

### may

### filewrittenrequest

### forstatusconference.

### Electronicallysignedon

### Thursday,

### January4,

### 2024pursuantto

### V.R.E.F.9(d).

# Pfig’wwVermontSuperiorCourt

### H.

### DicksonCorbettFlled01/024Windsornit

### Superior

### Court

### JudgeOrderPageof23-SC-02343CommissionerofLabor,StateofVermontv.CoreyGreene