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.

Now, according to the new rules in Maryland, debt buyers must show proof that the debt was bought from the original creditor. Also, for a debt collection company to seek a judgment against a debtor, the company must provide either a copy of the bill signed by the consumer or proof that the consumer in fact incurred the debt.

The Maryland Court of Appeals based its decision largely on the fact that debt buyers often sue a consumer whom they think is a debtor, even if the debt buyer knows from experience that the consumer will likely not file a notice of intention to defend against the lawsuit. The court recognized that the debt-buying companies that file the suits often don't have sufficient or reliable documentation. So, in fact, if the debtor had just challenged the action, he or she would likely have won the case.

Individuals who are bogged down with bills from debt collectors may want to consult with a Maryland bankruptcy attorney to explore all of the available options for discharging debt. Each situation is different, and a personalized approach to debt relief is likely what many people in the Annapolis area need.

Source: wbaltv.com, "New Md. Rules Make Judgments Harder To Obtain," Jan. 2, 2012