SACRAMENTO, Calif. — On Thursday, May 19th, Maryland Governor Larry Hogan signed SB 771/ HB 1491 (Chapter 579) into law, addressing the treatment of out-of-statute debt and statutorily codifies several provisions contained in the Maryland Rules of Procedure (MRP) concerning the litigation of consumer debt. Given that the language from the MRP was copied verbatim, DBA International does not expect member companies to experience compliance or operational issues.
However, the bill addresses consumer debt that is beyond the “applicable” statute of limitations, which will likely require some operational changes by creditors and companies litigating on older Maryland accounts prior to the bill’s effective date of October 1, 2016. Specifically, it states:
- A creditor or a collector may not initiate a consumer debt collection action after the expiration of the statute of limitations applicable to the consumer debt collection action
- On the expiration of the statute of limitations applicable to the consumer debt collection action, any subsequent payment toward, written or oral affirmation of, or any other activity on the debt may not revive or extend the limitations period
Additionally, the bill extends the rules of evidence to small claims actions brought by debt buyers or those acting on their behalf. The requirements of the law apply prospectively and do not apply to any debt collection action commenced prior to October 1, 2016.
DBA International worked closely with a coalition of associations, including the Maryland-DC Creditor’s Bar, Mid-Atlantic Collector’s Association, and the Maryland Banker’s Association, in the negotiation of this legislation. This cooperative relationship resulted in a manageable bill from the industry’s perspective and removed from the table: (1) extensive pre-litigation collection requirements, including some provisions that conflicted with the Fair Debt Collection Practices Act, (2) litigation requirements that conflicted with the MRP, and (3) a bill that would have prohibited the resale of receivables on the secondary market.