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Maryland Rules changes protect low-income consumers

On September 7, 2011, the Maryland Court of Appeals voted to approve proposed revisions to the Maryland Rules of Procedure that will require greater proof from debt buyers suing consumers on alleged debts. The Public Justice Center’s Skadden Fellow Jonathan Harris and Legal Director Deb Gardner successfully urged the Court to strengthen the Rules to protect low-income consumers from unscrupulous debt collectors, submitting written and oral comments together with the Maryland Legal Aid Bureau and other consumer advocates.

Debt buyers typically pay pennies on the dollar for charged-off consumer debts, and then sue in court with proof that oftentimes fails to meet basic evidentiary standards. The PJC and other consumer advocates argued for a greater level of proof to protect consumers. The Court heard them, rejecting the debt buying industry’s plea to be allowed to simply use a charge-off statement as proof of the existence of the debt. The revisions to the Rules require proof of ownership along the entire chain of title to help prevent the all-too-common practice of consumers being sued by multiple debt buyers on the same alleged debt.
The approved Rules will be a significant improvement. Maryland joins Delaware and other states that have recently moved to protect consumers’ rights by requiring more proof from debt buyers.
The details
The revisions amend the rules pertaining to affidavit judgments (Rules 3-306, 3-308 and 3-509) —an expedited procedure that allows judges to rule without a trial—by requiring the following:
1) Proof of the existence of the debt such as a bill or printout showing purchases, payments, or other actual use of a credit card or account by the consumer;
2) Proof of the applicable terms & conditions of the account agreement if the debt buyer is seeking interest or attorneys’ fees above the Maryland Constitutional rate of 6%/year; 
3) Proof of the debt buyer’s ownership in the form of a chronological listing of the names of all prior owners of the debt and the date of each transfer, and a certified or other properly authenticated copy of the bill of sale or other document that transferred ownership of the debt to the plaintiff and to each purchaser of the debt in the chain of ownership;
4) Identification of the account including the name of the original creditor, the defendant’s full name as it appears on the original account and last four digits of his/her social security number, the last four digits of the original account number, and the nature of the consumer transaction (utility, credit card, consumer loan, etc.);
5) For charged-off accounts: date of charge-off, charge-off balance, an itemization of fees or charges claimed by plaintiff in addition to the charge-off balance, an accounting of all post-charge-off payments received and other credits to which the defendant is entitled, and the date of last payment or last transaction;
6) For non-charged-off accounts: an itemization of all money claimed by the plaintiff including principal, interest, finance charges, service charges, late fees, and any other fees or charges added to the principal by the original creditor or subsequent assignees and accounting for any reduction in the amount of the claim, and the amount and date of the last charge and last payment; and
7) Proof the plaintiff holds a Maryland collection agency license.
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