What specific protections does the state of Maryland provide for the collection of debt and does that differ in any way from the protections offered to consumers by the Federal Fair Debt Collection Act?
In this time of mortgage and credit crises, the number of consumers defaulting on loans and credit card payments is high. As a result, many creditors may be tempted to get more aggressive in collecting this debt. However, this aggression may cross the line into illegal territory if they engage in certain acts prohibited by both Federal law and Maryland Commercial Law.
The Federal Fair Debt Collection Act, as enforced by the Federal Trade Commission states unfair collection is:
THE FAIR DEBT COLLECTION PRACTICES ACT
As amended by Pub. L. 109-351, §§ 801-02, 120 Stat. 1966 (2006)
As a public service, the staff of the Federal Trade Commission (FTC) has
prepared the following complete text of the Fair Debt Collection Practices Act
(FDCPA), 15 U.S.C. §§ 1692-1692p.
§ 808. Unfair practices
A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.
(2) The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector’s intent to deposit such check or instrument not more than ten nor less than three business days prior to such deposit.
(3) The solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution.
(4) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.
(5) Causing charges to be made to any person for communications by concealment of the true propose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees.
(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if-
(A) there is no present right to possession of the property claimed as collateral through an enforceable security interest;
(B) there is no present intention to take possession of the property; or
(C) the property is exempt by law from such dispossession or disablement.
(7) Communicating with a consumer regarding a debt by post card.
(8) Using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.
This section of the Federal Fair Debt Collections Act covers the many ways in which a creditor may and may not contact you, as well as how payments are to be handled. Empty threats and threats to claim property that they have no right to claim are also prohibited. This also keeps the collector from collecting money in excess of what is allowed by law and agreed upon by the debtor.
In Maryland, the following statue applies under Maryland Commercial Law (this is also referred to as the Maryland Consumer Debt Collection Act):
§ 14-202. Certain acts prohibited.
In collecting or attempting to collect an alleged debt a collector may not:
(1) Use or threaten force or violence;
(2) Threaten criminal prosecution, unless the transaction involved the violation of a criminal statute;
(3) Disclose or threaten to disclose information which affects the debtor’s reputation for credit worthiness with knowledge that the information is false;
(4) Except as permitted by statute, contact a person’s employer with respect to a delinquent indebtedness before obtaining final judgment against the debtor;
(5) Except as permitted by statute, disclose or threaten to disclose to a person other than the debtor or his spouse or, if the debtor is a minor, his parent, information which affects the debtor’s reputation, whether or not for credit worthiness, with knowledge that the other person does not have a legitimate business need for the information;
(6) Communicate with the debtor or a person related to him with the frequency, at the unusual hours, or in any other manner as reasonably can be expected to abuse or harass the debtor;
(7) Use obscene or grossly abusive language in communicating with the debtor or a person related to him;
(8) Claim, attempt, or threaten to enforce a right with knowledge that the right does not exist; or
(9) Use a communication which simulates legal or judicial process or gives the appearance of being authorized, issued, or approved by a government, governmental agency, or lawyer when it is not.
These protections afforded by the state of Maryland show an attempt by the state to protect consumers from mental anguish that comes from personal threats and threats to disclose personal information to those who have no right to such information. It also protects the consumer from empty and vicious threats on the part of the collector. In short, this section of Title 14 really protects the consumer from certain types of communication by the creditor that is contrary to good business practice.
So what we have here in Maryland does not detail as many infractions as the federal act does, however, the Maryland statute refers to items not mentioned in the federal act. For example, section 808 of the federal statute does not mention contact with employers, but the Maryland statute does. This is important because many people do not know the rights they have under both the Federal Fair Debt Collections Act and the Maryland Consumer Debt Collection Act. Also, the federal act details how and when a collector may receive and deposit post dated checks. The Maryland act does not cover this.
This leads me to believe that although the Federal Fair Debt Collections Act has some points that are more specific than the Maryland Debt Collection Act, consumers in the state of Maryland are still protected under both acts.
All too often what happens is the consumer feels helpless because they believe what the creditor on the other end is saying.
Maybe the creditor is urging them to pay so that their credit report is not affected in a negative way. Perhaps the creditor is urging some sort of arrangement in order to avoid having the account moved to the legal department. And when an agreement cannot be reached, the consumer is left thinking that they are going to get sued by MasterCard because they are 2 months behind. Or even worse, the consumer no longer answers the phone because almost every call is a creditor – maybe as many as 20 calls a day.
In an attempt to clear up some of this misinformation, the Federal Trade Commission (FTC) has put up a page of frequently asked questions about debt collections. One of those items that is often misunderstood is when a collector may contact you.
According to the FTC:
How may a debt collector contact you?
A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.
This is very useful information if you are still getting calls after 9 pm.
So what do you do when a collector violates the law? The FTC recommends the following actions:
What can you do if you believe a debt collector violated the law?
You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, you may recover money for the damages you suffered plus an additional amount up to $1,000. Court costs and attorney’ s fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of the collector’ s net worth, whichever is less.
Where can you report a debt collector for an alleged violation?
Report any problems you have with a debt collector to your state Attorney General’s office and the Federal Trade Commission. Many states have their own debt collection laws, and your Attorney General’ s office can help you determine your rights.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
In the state of Maryland you may file a general complaint with the Office of the State Attorney General’s Consumer Protection Division at (410) 528-8662 or 1 (888) 743-0023 toll-free. Forms for complaints can be filed online. Keep in mind that according to Maryland law:
§ 14-203. Liability for damages.
A collector who violates any provision of this subtitle is liable for any damages proximately caused by the violation, including damages for emotional distress or mental anguish suffered with or without accompanying physical injury.
The problem for many consumers comes with proving that the company has violated fair debt collection practices because they do not know what to listen for what watch out for in regards to the law. Too often, people find out the hard way to record conversations, keep meticulous notes, and have all agreements in writing.
So, from my understanding, this is how the collection process is supposed to work:
1. You, the debtor, fall behind on your debt payments.
2. You are contacted by the creditor with whom you’ve fallen behind.
3. You come to a payment arrangement.
4. You pay as scheduled and the debtor is satisfied.
However, it is never that simple. Depending on the type of debt, there may have been interest added and attorney’s fees (such as in the case of rent owed).
When the above process fails the creditor may sell your debt to a collection agency or proceed with a civil suit. Many people do not understand that once you get to the lawsuit, unless the creditor has presented false information, you will lose because you do owe the money.
Once that happens, the creditor then has a number of options in recovering this debt, including wage garnishment.
According to Maryland law, the following are exceptions and limitations on what wages can be attached and how much of it can be attached:
§ 15-601.1. Exemption from attachment.
(a) Disposable wages.- In this section, “disposable wages” means the part of wages that remain after deduction of any amount required to be withheld by law.
(b) Amounts of wages exempt; medical insurance payments.- The following are exempt from attachment:
(1) Except as provided in item (2) of this subsection, the greater of:
(i) The product of $145 multiplied by the number of weeks in which the wages due were earned; or
(ii) 75 percent of the disposable wages due;
(2) In Caroline, Kent, Queen Anne’s, and Worcester counties, for each workweek, the greater of:
(i) 75 percent of the disposable wages due; or
(ii) 30 times the federal minimum hourly wages under the Fair Labor Standards Act in effect at the time the wages are due; and
(3) Any medical insurance payment deducted from an employee’s wages by the employer.
(c) Calculation per pay period.- The amount subject to attachment shall be calculated per pay period.
Imagine my surprise, then, when a credit collector told me that up to 85% of my wages could be garnished including income that was non-taxable and, thus, not considered wages.
In conclusion, citizens of the state of Maryland are protected by both the Federal Fair Debt Collection Act and the Maryland Debt Collection Act (Title 14 under Maryland Commercial Law). Also, should a collector be found in violation of either act, the proper recourse could involve complaints at both the state level (at the state attorney general’s office) and the federal level with the Federal Trade Commission. Although complaints may be filed, it is most important for consumers to be aware of what collectors can and cannot do so that they are not subject to harassment and illegal behavior.
