A Guide To Settle A Debt In Maryland

Despite being sued for a debt in Maryland, settling the debt at any point during the lawsuit process is still possible. To successfully reach a debt settlement in Maryland, you must respond to your pending lawsuit, send a settlement offer, and obtain a written settlement agreement. By settling your debts, you can get back on track financially and pay off your most pressing debts.

The debt settlement process has been of great assistance to countless Maryland consumers drowning in debt. It helps them deal with their most urgent obligations, relieving them from the pressure that builds when collectors refuse to stop calling.

Although many creditors and debt collectors prefer to settle for less than the original amount to receive no payment, you will have a better chance of settling your debts if you make a lump sum payment. If you do not have enough savings to pay upfront, you can set up a payment plan over a short period. Some companies accept a down payment with the promise of delivering the balance within a short period.

You can still settle your debt in Maryland if you’ve been sued. This article will explain how to reach a reasonable settlement agreement with Maryland creditors and debt collectors at any stage of the debt collection process, including during a debt lawsuit.

Three steps to settle a debt in Maryland

Getting your debt settled is pretty simple if you’re good at negotiating or if you hire a reputable company. You must stay committed until you’re debt free and the creditor closes the account. If you get sued, you could lose everything if you don’t settle.

Here are three proven steps to settle Maryland debt:

1. You should respond to your debt lawsuit with an answer.
2. Negotiate a settlement offer.
3. Make sure the settlement agreement is in writing.

1. Answer the debt lawsuit as soon as possible

The Maryland Rules of Civil Procedure, Rule 2-321, states that you can respond to a debt lawsuit within 30 days before losing automatically by default judgment if you do not respond.

Debtors and collectors know that most consumers don’t respond to debt lawsuits in time, and they hope you’ll do the same. If you don’t respond, the judge can grant you a default judgment, which gives your creditors or collectors the right to garnish your wages, seize your property, freeze your bank account, etc.

If you plan to settle, filing an Answer buys you time to negotiate a fair settlement and may help your case if the creditor rejects it.

First, you have to respond to the creditor’s accusations. Maryland law gives you three options:

1. Admit, deny, or deny for lack of knowledge.
2. Don’t admit to all the allegations. Otherwise, you’ll lose.
3. Let the creditor prove their case. They might even pull the case if they don’t have enough evidence.

Next, list your affirmative defenses. This is why you aren’t responsible for the debt. For instance, there’s an expired statute of limitations on debt, or you don’t have a business relationship with the debt collector. You’ll need the proper affirmative defense if you have to go before a judge.

2. Offer to start settlement negotiations

To begin negotiations with the Maryland court, you need to send the Answer, confirm that it’s in the court records, and start by choosing the proper negotiation method. Regardless of whether you wish to negotiate yourself or hire a debt settlement company, you should consider these two factors when deciding which way is best for you:

• Decide what you can gather for settlement: If you approach the creditor with a tiny amount, they may not be willing to negotiate and risk their chances in court if they refuse to negotiate. Therefore, you must save a considerable amount of money to attract their attention, and if necessary, you should cut down on expenses to save more.
• Consider the debt collection agency’s full payment: You’ve probably heard they take as little as 10% of the debt as full payment. In rare cases, this’s true, but you need to do some research about the creditor you’re dealing with and whether a low amount is acceptable. Original creditors generally get 60–80% of the original debt, while collection agencies get 10–60%.

When working with a debt settlement company, most consumers can reach a settlement agreement of 50%. It’s not easy, and you might have to show severe financial hardship.

To give yourself room to grow, start with a debt settlement offer of 60% of the total debt value. So, if you owe $10,000 in debt, you’d pay $6,000 in debt settlement.

You’ll likely get at least one counteroffer from the creditor or debt collector. You may even go through several rounds of negotiations before reaching an agreement. Also, only accept an offer you know you can afford.

Once you’ve reached a fair agreement, it’s time to write it down.

3. Obtain a written settlement agreement

There are many complaints from consumers who got ripped off by debt collectors during settlements. For instance, the debt collector doesn’t keep their end of the bargain after they make payments. They asked the consumer to pay the balance so they could keep their word.

It’s also possible for debt collectors to agree to a settlement verbally and then go to court behind consumers’ backs.

Ask the creditor or debt collector for the settlement agreement in writing so you can take legal action if they break it. 

Let’s look at an illustration.

For example, Quantum Merchant Services sued Candice in Maryland for a $3,790 debt she had not paid for two years. When she responded to the lawsuit before the state’s deadline, she searched for debt settlement companies that would accept her debt, but they refused due to the low amount of debt she owed. In the end, Quantum Merchant settled their debt for a mere $ 2,600 (68%) after several negotiations.

Maryland debt settlement laws can protect you

Thousands of Maryland debtors have been protected over the years by the Maryland Debt Settlement Services Act against bad business practices that some debt settlement companies employ. The guidelines instruct the settlement companies on how to charge for services, the licensing required, how to conduct the settlement process, and the penalties awarded. For example, Code Ann. 12-1010, on fees, states that debt settlement companies should not:

• Charge for consultation or accessing the consumer credit report.
• Provide services for a voluntary contribution from the consumer.
• Only ask for payment once a settlement has been negotiated with the creditor.
• Prevent the consumer from accessing the account into which the monthly deposit is being made.

As part of the recent amendments to the Telemarketing Sales Rule by the Federal Trade Commission, debt settlement regulations have been extended to all debt relief organizations and companies in addition to Maryland’s state laws. This Rule applies to all 50 states regarding debt settlement practice, including Maryland.

As a result of this new Rule, any company providing debt relief services, namely debt settlement companies, cannot:

• Charge upfront fees. Deb settlement companies illegally collect consumer fees before the debt is effectively settled.
• Ensure to disclose certain information about its services before a consumer enrolls in the program. Those things include how much the service costs, how long it takes to see results, how much money must be saved before a settlement offer is made, what happens if the consumer doesn’t make payments on time, and the customer’s rights.
• Misrepresent their services. A debt settlement company cannot make any false or unsubstantiated claims regarding the services they provide to its clients.

Report any debt settlement company violating these laws to your attorney general’s office under the consumer protection division if you believe they are violating them.

Is there a debt settlement company that is the best?

It is essential to find a debt settlement company that will cater to your debt needs first before taking a cut of the settlement deal they can get for you. They should also have a good reputation online with past clients. Consider working with the following companies:

• CuraDebt: As part of the settlement process, the specialists guide you and ensure you get the best deal possible.
• Clear One Advantage: In addition to determining how much you are likely to settle for, the expert also calculates the amount you will save before you begin making payments.
• Citizens Debt Relief: When you commit to the program, they help you get out of debt in the shortest time possible.

Contact the debt collector in the most effective way

You should engage the creditor in a mode of communication that is most effective for you and ensures you get results by utilizing the do-it-yourself approach. Choose the method that works best for you and ensures you get results:

• Phone: If you speak to the debt collector over the phone, you will be able to achieve quick results; however, you will only have tangible proof of the agreement if you record the conversation in writing. Unfortunately, Maryland is an all-party consent state (MD Code Ann. 10)-402 and 10-410), meaning you must inform the debt collector you wish to record the conversation. It is often the case that they will refuse and disconnect the call.
• Mail: As a matter of fact, negotiating via mail ensures you have hard proof of the entire process, but it takes longer because of the days between sending and receiving mail. Make use of certified mail to ensure the creditor has accepted your offer.
• Email: Deb settlement companies prefer this method because it is quick, efficient, and leaves a paper trail. This is a great way to ensure the debt settlement is completed quickly, even if you are doing it yourself. Once you get the company’s or lawyer’s email, you can have the settlement deal in no time.

What you need to know about Maryland debt relief

You can get debt relief with debt settlement, but consolidation and bankruptcy are also effective ways to get out of debt.

Maryland debt settlement FAQs

Is Maryland a good place to settle my debts?

Following the debt collection and settlement laws, you can settle your debts in Maryland. When you’ve saved enough money, you can send your offer to the creditor and wait for their response. You have thirty days to respond with an Answer if you’re seeking a settlement because a lawsuit’s been filed. If they like it, they’ll accept or counter it.

In Maryland, does debt automatically clear after seven years?

It is essential to realize that debts only go away once they are settled or paid in full. However, most debts fall off your credit report after seven years, but the creditors can still attempt to collect. Even when the debt collectors expire, they are only prevented from taking you to court, not from collecting the debt.

When a debt is sold to a collection agency, do I have to pay it?

The only way to get out of longstanding debt is to pay it or ask them to cancel it. You can choose not to pay, but the collection agency can make you pay or take you to court.