Consumers and the Courts
Maryland’s Courts Require More Proof in Debt Collection Cases
The Maryland Judiciary has enacted stricter measures that protect consumers from overzealous debt collectors. The Court of Appeals has adopted new rules changes that will require “debt buyers” to provide more proof before being allowed to obtain affidavit judgments against consumers to recover alleged debts. Debt buyers get affidavit judgments when the alleged debtor does not respond to the lawsuit. The amendments took effect January 1, and will apply only to actions started on or after that date.
The Judiciary’s Rules Committee investigated this issue and recommended the changes.
Debt buyers are companies that specialize in buying debts owed to creditors, usually credit card companies. They buy those debts 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 is sometimes little more than the person’s name, last known address and Social Security number.
Debt buyers sue the person they believe to be the debtor in District Court, seeking an affidavit judgment, “knowing from experience that the defendant often does not file a notice of intention to defend or appear for trial,” the Rules Committee report stated. “The problem, which has been well documented, … is that the plaintiff often has insufficient reliable documentation … and, had the debtor challenged the action, he or she would have prevailed.” The new rules require additional information from debt buyers bringing these cases to court, including better proof of an existing debt or interest owed on a debt, and proof from the debt buyer that they own the debt they are trying to collect.
The rules changes were needed because of “the flood of thousands” of debt collection cases filed in the District Court, the Judiciary’s Rules Committee stated in its report to the Court of Appeals. The committee noted that the problem “has received national attention and has generated concern in Maryland by the Commissioner of Financial Regulation, the Office of the Attorney General and the District Court.”
“In this current recessionary economy, the District Court has been seeing an increasing number of debt collection cases,” said Chief Judge Ben C. Clyburn of the District Court of Maryland. “The rules changes provide more transparency, and our judges will have more information to base decisions on, which makes it a true win for consumers in Maryland. I commend the Court of Appeals, the Rules Committee and the Office of the Attorney General for their insightful response to this serious consumer issue.”
The 171st Report of the Standing Committee on Rules of Practice and Procedure (The Rules Committee)
The Court of Appeals Rules Order, including the amendments to Rule 3-306, 3-308, and 3-509