In Maryland, companies that offer debt settlement services must register with the Commissioner of Financial Regulation and pay a registration fee. “Debt settlement services” are defined as any service that helps consumers renegotiate or settle debts between a consumer and a debt collector or creditor.

Read the Law: MD Code, Financial Institutions §12–1001

Debt settlement services are different from debt management services under Maryland law. 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.

Read the Law: MD Code, Financial Institutions §12–901

A debt settlement service can only take money from consumers to settle a debt if it:

  • Makes no more than six setllement payments for each debt.
  • Has a separate bank account to hold money for its customers to use to pay off customer debts.
  • Works to lower the debt principal with creditors.

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

Read the Law: MD Code, Financial Institutions §12–1014

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

Read the Law: MD Code, Financial Institutions §12–1016

Source: 

Edits by Regina Strait, Esq.

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