Consumers and the Courts
District Court of Maryland Acts on Thousands of Consumer Debt Cases
The District Court of Maryland, where debt collection cases are filed, has dismissed thousands of debt collection cases against Maryland consumers over the past 18 months.
“Our actions in dismissing these cases is another effort to respond to several issues in the debt collection industry, and put us at the forefront in responding to these issues,” said Chief Judge Ben C. Clyburn of the District Court of Maryland.
A new industry -- “debt buying,” -- has clogged the dockets of small claims courts in Maryland and throughout the country, particularly during the current recession. Debt buyers specialize in buying debts owed to creditors, usually credit card companies, for a tiny fraction of the amount owed. Debts may be sold to other debt buyers several times, and the documentation – the proof – that the debt is owed sometimes is little more than the person’s name, last known address and Social Security number.
“In this current recessionary economy, the District Court has been seeing an increasing number of debt collection cases,” said Chief Judge Clyburn of the District Court of Maryland. “We have been responding to many issues related to debt-buying and we now have new rules in place that help make the process more transparent, give the judge more information, and level the playing field for consumers.”
In 2010, Judge Clyburn dismissed more than 27,000 debt collection cases against Marylanders when the national law firm Mann Bracken LLP collapsed. The Maryland State Collection Agency Licensing Board, the state agency that licenses debt collectors, had determined that the firm no longer met the licensing requirements and ordered Mann Bracken to immediately stop collections. As a result Judge Clyburn decided to dismiss without prejudice all of the cases statewide. “We took action so Maryland consumers would not be inconvenienced,” Judge Clyburn said.
In March 2011, Judge Clyburn dismissed more than 10,000 debt collection cases because of a settlement of a class action lawsuit against Midland Funding in U.S. District Court. The cases were dismissed because Midland Funding was not then licensed as a debt collection agency by the Maryland Department of Licensing and Labor Regulation (DLLR). Those dismissals included cases against Maryland residents who had been sued in Maryland District Court between Jan. 15, 2007, and Jan. 15, 2010, by Midland Funding to collect debts. Midland Funding is a former client of Mann Bracken.
In September, the District Court chief judge dismissed 314 debt collection cases against Maryland residents as part of the terms of a settlement agreement between the Sunshine Financial Group and the Maryland State Collection Agency Licensing Board. The dismissals included cases against Maryland residents who have been sued in Maryland District Court by Sunshine Financial Group to collect debts. In addition to the dismissals, Judge Clyburn ordered that, for 323 other Sunshine Financial Group cases that have already gone to judgment, the attorney fees will be indicated as satisfied. Additionally, for 18 other cases that have already gone to judgment, the attorney fees and pre- and post-judgment interest will be indicated as satisfied.
In November, Judge Clyburn ordered a “stay” on 3,878 debt collection cases against Maryland residents. An “order to stay” temporarily stops a court proceeding or temporarily prevents a company or an individual from collecting any monies owed. Judge Clyburn’s order followed the suspension of collection agency licenses of LVNV Funding, LLC, and Resurgent Capital Services by the Maryland Department of Labor’s Office of Financial Regulation. The order to stay will be in effect until further notice, Judge Clyburn said.
The District Court has directed that court records and the Judiciary Case Search public records website be updated to show these orders. The cases were dismissed “without prejudice,” which mean a case can be re-filed in the future. For more information, Maryland residents who are affected by these dismissals or stay orders should contact the local District Court location where the debt collection case was filed.
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