Learn Maryland's Rules For Garnishment, Liens, and Foreclosure
A lender, collection agent or law firm that owns a collection account is a creditor. The law gives creditors several means of collecting delinquent debt. But before a creditor can start, the creditor must go to court to receive a judgment. See the Bills.com article Served Summons and Complaint to learn more about this process.
The court may grant a judgment to the creditor. A judgment is a declaration by a court the creditor has the legal right to demand a wage garnishment, a levy on the debtor’s bank accounts, a lien on the debtor’s property, and in some states, ask a sheriff to seize the debtor’s personal property. The laws calls these remedies. A creditor granted a judgment is called a judgment-creditor. Which of these tools a judgment-creditor will use depends on the circumstances. We discuss each of these remedies below.
Maryland Wage Garnishment
The most common method used by judgment-creditors to enforce judgments is wage garnishment where a judgment[creditor contacts your employer and requires the employer to deduct a certain portion of your wages each pay period and send the money to the creditor.
Maryland exempts 75% of your net wages. You must be given a notice, called a writ prior to a wage garnishment in Maryland, and can answer the writ by claiming exemptions authorized by law.
A lien is an encumbrance — a claim — on a property. For example, if the debtor owns a home, a creditor with a judgment has the right to place a lien on the home, meaning that if the debtor sells or refinances the home, the debtor will be required to pay the judgment out of the proceeds of the sale or refinance. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent the debtor from selling or refinancing until the debtor can pay off the judgment.
In Maryland, a judgment lien can be attached to real estate, and not to personal property.
If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.
Levy Bank Accounts
Some states like Maryland call bank account levy garnishment. A levy means the creditor has the right to take whatever money is in a debtor’s account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state’s laws to find if a bank account can be levied.
Under Maryland law, consumers have the option to file exemptions for the following:
- Wearing apparel, books, tools, instruments or appliances up to $5,000 in value necessary for the practice of any profession, except those kept for sale, lease or barter
- Injury, accident disability or death benefits
- Professionally prescribed health aids
- Debtor’s interest in household furnishings, including pets up to $1,000 in value
- An additional $6,000 in a financial account if claimed within 30 days after service of the writ
See Maryland Annotated Code, Courts and Judicial Proceedings § 11-504 to learn more about wage and account garnishment and the exemption rules.
Maryland Statute of Limitations
Each state or commonwealth has its own statute of limitations on civil matters. Here are some of Maryland’s statutes of limitations for consumer-related issues:
|Credit card||3*||Md. Courts & Judicial Procedure Code § 5-101|
|Spoken contract||3||Md. Cts. & Jud. Proc. Code § 5-101|
|Written contract|| Default: 3 |
Contract under seal: 12**
|Md. Cts. & Jud. Proc. Code § 5-101 or Md. Cts. & Jud. Proc. Code § 5-102(a)(5)|
|Judgment Lien||12||Md. Ct. Rule 2-621, 2-625, 3-621, 3-622 and 11-402|
|Judgment||12***||Md. Cts. & Jud. Proc. Code § 5-102(a)(3)|
| * Credit card-related debt falls under the written contracts rule. |
** A sealed contract has special decorative stamps or seals affixed near both parties' signatures.
***Can be renewed as per Maryland Court Rule 3-625.
When the statute of limitations clock starts depends on the circumstances and the particular statute. Generally, it starts when the action accrues, which means the date of breach. For credit card debt, this means the date the payment was missed.
A lender may foreclose judicially or non-judicially in Maryland. The common method is non-judicial, which takes a minimum of 45 days. A notice of foreclosure must be given to the homeowner 45 days and then 10-30 days before the sale occurs. Maryland mortgage and foreclosure laws can be found at Maryland Code Annotated, Real Property, § 7-105 to 7-105.8.
Lenders may pursue a borrower to collect a deficiency balance relating to mortgage foreclosure (Maryland Rules Title 14-200).
Maryland Consumer Debt Collection Act
Collection agents and lawyers who devote more than 50% of their business activity to collections must have a Maryland license. The Maryland Consumer Debt Collection Act (MCDCA) covers collection agents and original creditors. Otherwise, the MCDCA mirrors the FDCPA in most respects.
Violation of the MCDCA is a civil and not a criminal matter. You can sue for actual damages. The MCDCA doesn't mention punitive damages, and says the debtor can get damages for "emotional distress or mental anguish." This is a high standard requiring you to show the collector's actions were "extreme and outrageous."
Consult with a lawyer to discuss filing a civil lawsuit against the collection agent. Some lawyers take these cases on a contingency basis, which means no out-of-pocket costs to you. These laws are found in Maryland Annotated Code, Commercial Law 14-201 to 204.
Consult with a Maryland lawyer who is experienced in civil litigation to get precise answers to your questions about liens, levies, garnishment, and foreclosure.