From: Federal Trade Commission
- Evaluate My Situation
- Find Alternatives to Court
- Find Court and Legal Forms
- Research the Law
- File a Case
- Prepare for My Day in Court
- Appeal or Enforce a Decision
Both federal and state laws govern third-party debt collectors. Debt collectors are collection agencies, attorneys, creditors collecting for someone else, and creditors collecting under another name as well as others. Creditors collecting for themselves are not “debt collectors.”
Read the law: United State Code Title 15, Chap 41. Subchapter V
Read the Law: MD Code Comm. Law §14-201 et seq.
You can’t be put in jail for not paying a consumer debt. There is no such thing as a “debtors’ prison.” If you can’t afford to pay a consumer debt, the law limits what a creditor can do to collect it. Failure to pay other types of debt, such as child support or restitution ordered after a criminal conviction, may result in jail time.
If you don’t pay a debt, the creditor may call you or write you to ask you to pay the debt. The creditor may send your debt to a collection agency. The collection agency will also call and write. Sometimes these calls or letters can be harassing. If you don’t want to get any more calls or letters, you can write a letter to the collection agency and ask it to stop contacting you.
You can set up a payment agreement with a creditor if you can afford to pay the debt. You are not required to set up a payment plan. If you can’t afford to make the payments, you shouldn’t agree to a payment plan.
When you don’t pay a debt, most creditors report it to the national credit bureaus. This is how you get “bad credit.” If your credit is bad, you may have trouble renting an apartment, buying a car, getting insurance, or getting a loan. It may also make it harder for you to get a job.
Yes. If you don’t pay, the creditor may file a lawsuit against you. If the creditor wins the lawsuit, it will get a judgment. A judgment is a final court order that states you owe money to the creditor.
No. Government benefits are protected from creditors. These benefits include Social Security, Supplemental Security Income (SSI), Veterans’ benefits, Unemployment benefits, Workers’ Compensation, and Temporary Cash Assistance. In addition, private disability income benefits and most pensions are protected. This means creditors can’t legally take them.
If a creditor has a judgment against you, it can ask the court for the money in your bank account. This may result in the bank freezing your account and paying the money to the creditor. However, you can stop a creditor from taking your money if you have $6,000 or less in your account or if the money in your account is from Social Security or other government or retirement benefits. If your bank account is frozen, you will need to file a paper called a “motion” with the court to get to your money.You should contact Legal Aid or another lawyer right away to get help. You should file within 30 days to get the most protection.
If a creditor has a judgment against you, it can ask the court to order your employer to “garnish” your wages. When wages are garnished, your employer pays part of your wages directly to the creditor. Your wages cannot be garnished if your disposable wages are less than 30 times the minimum hourly wage per week.* In any event, no more than 25% of your disposable wages can be garnished. This means that you will receive at least 75% of your disposable wages. Your disposable wages are your wages after subtracting the required deductions for federal, state, and local taxes, Social Security, unemployment insurance, State employee retirement systems, and health insurance.
*This means your wages can’t be garnished if you make less than $217.50 per week.
If a creditor has a judgment against you, it can ask the court to have the sheriff take or “levy” some of your personal property. Then, the creditor can ask that the sheriff sell this property, and pay the money from that sale to the creditor. It is very unusual for a creditor try to sell your personal property, because it costs more to sell than the property is worth. Creditors cannot sell any of your property unless the “fair market value” of all of your property is more than $7,000. The “fair market value” is the money you could get for the property in its current condition, if you sold it at an estate or yard sale. It is NOT what you paid for the property.
This site offers legal information, not legal advice. We make every effort to ensure the accuracy of the information and to clearly explain your options. However we do not provide legal advice - the application of the law to your individual circumstances. For legal advice, you should consult an attorney. The Maryland State Law Library, a court-related agency of the Maryland Judiciary, sponsors this site. In the absence of file-specific attribution or copyright, the Maryland State Law Library may hold the copyright to parts of this website. You are free to copy the information for your own use or for other non-commercial purposes with the following language “Source: Maryland's People’s Law Library – www.peoples-law.org. © Maryland State Law Library, 2013.”