How Maryland’s Debt Collection Laws Protect You

Many Americans struggle to make ends meet every month. Sometimes, there isn’t enough money to pay all the bills. If you get behind on payments, creditors might start sending late notices or hire a collection agency to help them get paid. Collection agencies are third-party debt collectors whose business is to collect debts for others. They use all types of tactics to recover money. You aren’t alone if you’re feeling intimidated by a debt collector. Federal law and Maryland state law protect you from deceptive and abusive debt collection actions. If you have had communications with a debt collection, you should know your rights. 

The Maryland Consumer Debt Collection Act

Debt collectors are allowed to collect, but they can’t do whatever they want to get you to pay. Debt collection laws protect consumers from the methods debt collectors use to recover money. The federal Fair Debt Collection Practices Act (FDCPA) restricts the collection activity of debt collectors in every state. State laws also safeguard consumers. Like the FDCPA, the Maryland Consumer Debt Collection Act (MCDCA) protects Maryland consumers from abusive, deceptive, and unfair debt collection activities. But Maryland law covers more people than federal law. 

The FDCPA covers the actions of debt collectors. A debt collector is a third party that collects debts for creditors. Collection agencies and law firms that collect debts are debt collectors. The Maryland law oversees the activity of creditors and debt collectors. A creditor is a person or business you owe money to. The MCDCA defines a collector to be any person collecting or attempting to collect a consumer debt. So, Maryland law covers individuals, businesses, and legal entities seeking to collect a debt. Debt buyers—businesses that buy debt from creditors—also fall within the definition of a collector.

Similar to the Federal Fair Debt Collection Practices Act...

Maryland’s consumer protection law and the federal Fair Debt Collection Practices Act are similar in many ways. The federal law bans debt collectors from using abusive, unfair, or deceptive practices when collecting a debt. Unlike Maryland, it only restricts debt collectors. Like Maryland’s laws, the FDCPA covers consumer debt collection but not business debt collection. Consumer debt includes credit card debt, car loans, medical bills, mortgages, student loans, and other household debts. 

What Protections Does the FDCPA Provide?

Under the FDCPA, collectors can only call you between the hours of 8 a.m. and 9 p.m. They can’t contact you at a time they know is inconvenient for you or call you at work if you tell them you can’t receive calls there. They can call you on your cell phone and home phone, email you, or send you text messages. But they can’t call you if you send them a written letter telling them to stop contacting you, except to call to confirm this. They can also contact you if they plan to take specific action against you like filing a lawsuit. 

You have a right to request that the debt collector validate debt information. The debt collector must do this during the first phone call or by written letter within five days of the initial contact. The validation letter must state:

• How much money you owe;

• Name of the creditor you owe it to;

• How to get the name of the original creditor; and

• What to do if you don’t think you owe the debt.

You can dispute the debt. Within 30 days of receiving the validation letter, send a letter requesting verification of the debt. The debt collector has to stop collection actions until they verify you owe the debt and the amount you owe. 

Under the FDCPA, debt collectors can’t: 

• Lie to you: They can’t tell you you owe a different amount than you owe or pretend to be a court official. They can’t threaten you with criminal prosecution.

• Harass you: They can’t threaten to hurt you or use obscene language or profanities. They can’t repeatedly call you.

• Treat you unfairly: They can’t charge you interest or fees you haven’t incurred or publicly disclose your debt.

What's the Statute of Limitations for Debt?

Some debt collectors buy old debt. While they may try to collect the old debt, they can’t sue to recover it. Every state has a statute of limitations, or deadline, to bring a collections lawsuit. The statute of limitations is the last day a creditor has to sue to recover a debt. After that, the debt is time-barred. Debt collectors can’t threaten to bring a lawsuit if the debt is time-barred. You can learn the statute of limitations for collection actions by contacting Maryland’s attorney general in Baltimore. 

You don't have to pay time-barred debts, but they do stay on your credit report. Your credit score will probably be affected. Low credit scores affect your creditworthiness, which is a lender’s willingness to trust you to pay back a loan.

If you receive a summons and complaint, a lawsuit has started. Most people would answer the summons and complaint. If you don’t, a default judgment will most likely be entered against you, and the judgment creditor can seek to garnish your wages or bank account. Some income is exempt from wage garnishment, such as Social Security.

The Maryland Law Expands Consumer Protection

The Maryland Consumer Debt Collection Act law gives residents additional coverage. The law oversees the actions of third-party debt collectors and creditors. So, it regulates any person seeking to collect a debt. Like the FDCPA, Maryland’s law restricts consumer debt collection activity. Credit cards, car payments, mortgages, and leases are examples of consumer debts. The law regulates debt collections that arise from transactions to purchase real or personal property, services, money, or credit for personal, family, or household purposes.

Maryland’s MCDCA law prohibits many of the same activities as the FDCPA. In Maryland, a collector can’t make the following threats and contacts:

• Threaten to disclose false information about your creditworthiness

• Threaten criminal prosecution

• Threaten violence or physical harm

• Threaten to disclose or disclose information that will affect your reputation if the collector knows there's no legitimate need to make the disclosure 

• Use abusive language when talking to you and any of your relatives

• Contact you or your relatives frequently or at unusual hours

Debt collectors in Maryland also can’t threaten to speak with a third party to damage your reputation or contact your employer unless they have a judgment. Once they have a judgment, they can seek to garnish your wages or bank account to pay the judgment. You should receive notice of the wage garnishment. Once it begins, the creditor must send a statement of your payments. Money in a bank account may be exempt from garnishment under exemption laws. For example, under Maryland exemption law, child support payments are exempt.

Debt collectors can talk to your spouse, and if the debtor is a minor, they can contact the minor’s parents. But they can’t try to deceive you by tricking you into paying the debt or claiming they have a right that doesn’t exist. They’re also prohibited from sending you fake government official documents or a fake summons and complaint. 

Maryland requires debt collectors to be licensed by a state board. They can lose their license if they violate the law. A debt collection agency can't operate unlicensed. 

Under the MCDCA, you can sue a collector that intentionally discloses false information about you. You need to show that the collector knew the information was untrue. You can sue for actual damages suffered because of the collector’s conduct. You can seek compensation for emotional distress or mental anguish. But you need to prove the debt collector’s conduct was extreme and outrageous. 

The FDCPA doesn’t have such a strict standard. People can sue debt collectors for violating the law. They don't have to show the conduct was extreme and outrageous. Many people would sue debt collectors for violations under both FDCPA and MCDCA. 

If You Have a Complaint Against the Debt Collector...

You may also want to report a debt collector who is violating debt collection laws. You can report them to the Federal Trade Commission (FTC). The FTC enforces the FDCPA and can take the debt collector to court if they believe they are engaging in illegal activity. You also can file a complaint with the Consumer Financial Protection Bureau (CFPB). 

The CFPB protects consumers from abusive, unfair, and deceptive practices by financial companies. Complaints help the CFPB understand the challenges consumers face. They work for you. The best complaints filed detail what happened (and include documents), what you believe is a fair resolution, and what you have done to try to resolve the issue. 

You should report a debt collector who is abusive to the Maryland attorney general. The attorney general encourages people to advise them of complaints about the collection actions of a business. You can also notify the Maryland Department of Labor, Licensing, and Regulation. Collectors can have their licenses revoked if they behave illegally. 

Finally, you can file legal action against them for violation of the MCDCA and FDCPA. You may be entitled to a damages award. A good strategy is to sue them under both federal and state law. Maryland law has a stricter standard to meet than federal law. So, if you can’t meet that standard, you may still be awarded damages under federal law. You may recover court fees and attorney costs. You might want to seek legal advice from an attorney to see if you should take legal action.  

Documenting your interactions with the debt collector will help you make a complaint or sue them in the future. Make sure you record the date, time, who you spoke with, and what your conversation involved. Keep all written communications you send and receive. Preserve all text messages, emails, and letters. Evidence of their illegal behavior will help you prove your case. Also, you can use this documentation to discuss a settlement with the collector. Knowing you have a possible claim against might motivate them to settle the debt. 

Let’s Summarize...

Debt collectors can be very intimidating. They only make money when they collect money. So, they use all kinds of tactics to get you to pay. Some methods might be deceptive, unfair, or harassing. The federal Fair Debt Collection Practices Act protects you against the abusive behaviors of debt collectors. Maryland state law provides you with even more safeguards. Maryland regulates the conduct of anyone who is seeking to collect a debt, not just those who are in the business of debt collecting. 

Knowing your rights can provide you some comfort in a distressing situation. You can sue debt collectors who engage in deceptive, unfair, and harassing behavior. They also can have their license revoked. Take action if you are a victim of debt collector abuse. You might be entitled to damages and it might help you settle the debt with the collector.