Maryland Debt Settlement Services Act

A law that went into effect October 2011 requires companies that offer debt settlement services to register with the Commissioner of Financial Regulation and pay a registration fee. Debt settlement services are any service that helps consumers renogotiate or settle debts between a consumer and a debt collector or creditor. The law is in subtitle 10 of title 12 of the Financial Institutions Article.


"Debt settlement services" are different from "debt management services" under Maryland law. Debt management services are covered by subtitle 9 of title 12 of the Financial Institutions article. Debt management services take payments over a long period of time and distribute the payments among the person's creditors. Debt settlement services negotiate to settle a consumer's debt. A debt settlement service can only take money from consumers to settle a debt if:



  • it make no more than 6 payments for each debt.

  • it has a seperate bank account to hold money for its customers to use to pay off customer debts.

  • it works to lower the debt principal with creditors.

If the debt settlement service establishes a bank account for holding its customers money, it must file a $50,000 surety bond with the Commissioner of Finantial Institutions.


A violation of this law is an unfair or deceptive trade practice under Maryland law and the violator is subject to fees and penalties associated with the violation.

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