Annapolis MD Bankruptcy Law Blog

In a $26 billion settlement -- the largest of its kind since 1998 -- five major mortgage servicers have agreed to provide relief to homeowners who have endured the mortgage crisis that has had many Maryland residents considering bankruptcy. The deal, which was reached in large part through the work of state and federal officials, has been called historic, though many homeowners will likely say it doesn't do enough.

In any case, the five signed-on mortgage servicers -- JP Morgan Chase, Citigroup, Bank of America, Wells Fargo and Ally Financial -- have agreed to provide $17 billion in mortgage relief to about one million homeowners nationwide. Another $3 billion will go to refinancing borrowers to allow for lower interest rate loans. The federal government will receive $1 billion of the settlement, to be used also for relief for homeowners.

New rules in Maryland regarding the powers of debt collection companies went into effect earlier this month. The ruling, which was handed down from Maryland's highest court, came in response to the huge number of debt collection cases burdening the District Court. Now debt collection companies or debt buyers will have to have more than a person's name, last known address and Social Security number for the debt collector or buyer to pursue a judgment against the supposed debtor. The new rules, which will apply only to actions started on or before Jan. 20, are significant for consumers who need debt relief.

Residents in the Annapolis area may know that debt buyers are entities whose business it is to buy debts owed to creditors, which are often credit card companies. The debt buyers buy the debt for much less than the amount the debtor supposedly owes, and then the buyer can sell the debt to other buyers. Readers who have received collection letters from numerous companies regarding the same debt know that the debt-buying process can happen multiple times.

Maryland is one of six states in which JPMorgan Chase recently backed off attempts to recover credit card debt. Why? One reason may be that the credit giant might have used fraudulent or otherwise sloppy documents to show that it had the right to collect.

However, the exact reason for JPMorgan's stopping credit claims is unknown, since pursuing the collection of supposed credit card debt is major business for banks. Reportedly, JPMorgan received $1.4 billion last year on defaulted credit card loans. But, throughout the country last year, the company also dropped over 1,000 debt-collection lawsuits.

Recently, a Maryland company that made sensors and other products that are meant to detect miniscule amounts of toxic substances filed for Chapter 7 bankruptcy in a Baltimore court. Reportedly, the company's liabilities amounted to $89.5 million and no assets. The company manufactured such products as paintballs designed to prevent counterfeiting and smuggling; screening wipes and sprays; and products to detect types of pathogens acquired in hospitals.

Other shareholder claims listed in the company's petition include $1.7 million by a company in California; $8.65 million by a company out of New York; and $490,000 by a communications company in Reisterstown. The petition was said to have listed from 200 to 999 creditors, including the company's former CEO, whose share was reported to be $16.5 million.