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Consumer Debt - Financial Regulation

While borrowing money has its conveniences, it also carries the possibility of taking on too much debt. Certain habits may indicate an issue with your debt load:

  • Paying off an account only to charge it back up again
  • Maxing out or being close to maxing out your revolving lines of credit
  • Using alternative methods to pay creditors
  • Overdrawing your checking account
  • Not knowing how many creditors you owe, amounts you owe, or interest rates
  • Having a major utility disconnected due to non-payment
  • Overspending on wants instead of focusing on needs

If you find yourself in debt, a Debt Management Services (DMS) provider may be able to assist you in managing your debt through counseling and negotiated repayment terms. Learn more about DMS providers, your rights under Maryland law, and resources to find a DMS provider licensed in the state of Maryland.

You also have protections against abusive collection practices from collection agencies if you get behind on your bills. The Maryland Consumer Debt Collection Act provides recourse to Maryland consumers who have had their rights violated by collection practices. Learn more information about collection agencies licensed in the state of Maryland, collection practices prohibited by Maryland law, and ways to file a complaint.

Prepayment penalties may be permissible under certain Maryland law and are subject to certain limitations. However, many Maryland laws do not permit prepayment penalties. The language in the contract governs and must be reviewed carefully. A prepayment penalty may be allowed depending on the contract.

Predatory Lending

Predatory lending involves originating loans by deceiving the consumer on the benefits, the cost or the terms of the loan. You may file a complaint with the Commissioner of Financial Regulation if you believe that you are a victim of predatory lending. You may also file a complaint against any of the licensees or registrants regulated by this office if you believe they may be acting in violation of Maryland law. You should also check to see if an individual or business is licensed before doing business with them.

The Maryland Attorney General's Office has more information on predatory lending in relation to home equity loans.

Payday Loans

A payday loan is a term used to describe a short-term, high-interest loan, sometimes referred to as a “cash advance”, regardless of whether payment of the loan is linked to a borrower’s payday. The high cost of these short-term loans can sometimes trap consumers into a cycle of debt.

Learn more about payday loans, federal and state payday loan protections, and ways to submit a complaint.

Repossessions

Motor vehicles are one of the most common types of consumer goods repossessed. A creditor may repossess your vehicle if loan payments become delinquent, even after one missed payment. Failure to abide by other terms of the contract may also be grounds for repossession. Creditors may not use force in seizing the vehicle. The buyer will forfeit all rights under Maryland Law if the buyer is guilty of fraudulent conduct, intentionally and wrongfully concealing, removing, damaging or destroying the vehicle, or attempting to do so in order to prevent repossession.

Please review the full contract of the loan to determine under which Maryland law the loan was written. Typically, a creditor may:

  • Issue a Discretionary Notice at least 10 days prior to repossessing the vehicle to all signers on the loan by personal delivery or by certified or registered mail. You are not required to pay any repossession expenses if the creditor failed to issue you a Discretionary Notice.
  • Send a Required Notice to you by registered or certified mail within 5 days after the repossession of the vehicle.
  • Retain the repossessed vehicle for 15 days allowing you the opportunity to reinstate the contract.

If your complaint is against a car dealership, please contact the Maryland Motor Vehicle Administration (MVA) at 410-768-7000 to file a written complaint.

You can also file a complaint if you are facing repossession of your vehicle.

Additional information about auto loans:

Regulation and Complaints

The Office of the Commissioner of Financial Regulation licenses or registers, and regulates providers of a variety of financial services involved in the debt space. These include the following:

  • consumer loan companies
  • installment loan lenders
  • sales finance companies
  • credit service businesses
  • debt management companies
  • collection agencies
  • credit reporting agencies

To learn more about managing debt, debt relief services, debt management scams and your rights under federal law, visit the Federal Trade Commission’s “Coping with Debt” page.