Most people have no idea how many rules collection agencies must follow. Seriously. In Maryland, debt collectors face some of the toughest laws in the country. If you know your rights, you hold a lot more power than you think.
This article breaks down exactly what collection agencies can and cannot do in Maryland. We’ll cover licensing rules, your rights as a consumer, the statute of limitations, and what to do if a collector breaks the law.
What Is a Collection Agency?
A collection agency is a company or person hired to collect money that someone else is owed. They might contact you about an old credit card bill, a medical debt, or an unpaid loan. Some agencies buy debts from the original creditor. Others just collect on their behalf.
Here’s the key thing to know. In Maryland, the law covers more than just professional collection agencies. It covers almost anyone trying to collect a debt from you, including the original creditor.
The Two Main Laws You Need to Know
Maryland residents are protected by two sets of laws. Pretty straightforward, actually.
The first is the federal Fair Debt Collection Practices Act, often called the FDCPA. This is a federal law that applies nationwide. It mainly covers third-party debt collectors, meaning companies hired to collect debts for someone else.
The second is the Maryland Consumer Debt Collection Act, or MCDCA. This is Maryland’s own state law. It goes further than the federal law in one big way. It covers creditors collecting their own debts too. That means a store, hospital, or lender trying to collect directly from you must also follow these rules.
Does a Collection Agency Need a License in Maryland?
Yes. This part surprises a lot of people.
Maryland requires collection agencies to get a license from the Department of Labor’s Office of Financial Regulation. Without that license, they legally cannot collect debts in Maryland. If an unlicensed agency sues you and wins a judgment, that judgment could actually be void.
You can check whether a collection agency is licensed through the NMLS, which stands for Nationwide Multistate Licensing System. It’s a free public database.
Some businesses are exempt from the licensing requirement. These include banks, credit unions, licensed mortgage lenders, certain real estate brokers, and attorneys licensed to practice in Maryland.
What Collection Agencies Cannot Do in Maryland
Okay, this is the section most people need to read. Stay with me here.
The MCDCA lists specific actions that are illegal. A collector cannot use or threaten force or violence to collect a debt. They cannot threaten to have you criminally prosecuted unless you actually broke a criminal law.
They also cannot contact your employer before getting a final court judgment against you. That means they cannot call your boss to pressure you into paying. That is a clear violation of Maryland law.
Collectors cannot share information about your debt with other people who have no legitimate reason to know. They cannot tell your neighbors, friends, or relatives about what you owe.
Here’s where it gets really important. They cannot communicate with you in a way that is harassing or abusive. That includes calling you too many times, calling at weird hours, or using bad language. Repeated calls designed to wear you down are illegal.
They also cannot send you documents that look like official court papers if they are not. That fake “official notice” trick is a serious violation.
When Can Collectors Contact You?
Under the federal FDCPA, collectors can only call you between 8 a.m. and 9 p.m. Calling before or after those hours is a violation.
They cannot call you at work if your employer does not allow personal calls. They cannot contact you in ways that they know are inconvenient for you.
And here’s a powerful tool you have. If you send a collection agency a written letter asking them to stop contacting you, they must stop. They can still sue you or report the debt. But the calls and letters must end. Send that letter by certified mail and keep a copy.
The Statute of Limitations in Maryland
Not sure what “statute of limitations” means? No worries, let me break it down.
The statute of limitations is a deadline. It is the last date a collector can sue you in court to collect a debt. In Maryland, that deadline is three years. Three years from when the debt became due.
If a collector tries to sue you after three years, you can raise the expired deadline as a defense. The court will not automatically know the deadline has passed. You have to bring it up yourself.
Here’s a big warning. Do not make a partial payment on an old debt without talking to a lawyer first. If you voluntarily pay even a little bit toward an old debt, that can restart the three-year clock in Maryland. Suddenly a debt that was too old to collect becomes collectible again.
Also keep in mind, once a court judgment is entered against you, the creditor has 12 years to collect that judgment. That is a very different situation from the original debt.
New Medical Debt Rules in Maryland (2025)
Hold on, this part is important.
Maryland passed major new laws that went into effect on October 1, 2025. These laws specifically protect people with medical debt. Personally, I think these are some of the most important consumer protection updates in years.
Under the new rules, medical debt cannot be reported to credit bureaus in Maryland. That means a hospital bill cannot hurt your credit score. Debt collectors and medical providers are banned from sharing medical debt information with credit reporting agencies.
Any contract between a hospital or medical provider and a debt collector must include a clause preventing credit reporting. If that clause is not there, the contract is void.
Hospitals were also required to instruct credit bureaus to delete any previously reported medical debt by November 1, 2025.
If a debt collector wants to get a court judgment for medical debt, they must now state in the complaint that it involves medical debt. They also cannot place a lien on your primary home for medical debt. That is a huge protection for Maryland homeowners.
What Happens If a Collector Breaks the Law?
So what happens if a debt collector violates these rules? Let’s talk about the penalties.
Under the Maryland Consumer Debt Collection Act, you can sue the collector for damages. These damages include actual harm caused by the violation. They also include damages for emotional distress or mental anguish, even without physical injury. That is broader than what many states allow.
Under the federal FDCPA, you can also sue in state or federal court. If you win, you can get actual damages plus up to $1,000 in extra damages. The collector may also have to pay your attorney’s fees.
The State Collection Agency Licensing Board can take action too. They can fine a violating agency up to $500 per violation. Total fines from a single enforcement action cannot exceed $5,000. A collection agency can also lose its license entirely.
Think of it like this. Violating these laws is not just a slap on the wrist. It can cost collectors real money and their ability to do business in Maryland.
Your Rights When Sued by a Debt Collector
Being sued by a debt collector feels terrifying. Many people just ignore the court papers. That is a serious mistake.
If you ignore a lawsuit, the court will almost always rule in the collector’s favor automatically. That is called a default judgment. Now they can garnish your wages or bank account.
Do not ignore it. Respond to the lawsuit. You have the right to dispute the debt, raise the statute of limitations as a defense, or challenge whether the collector even owns the debt.
Debt buyers, companies that buy old debts for cents on the dollar, must prove they own the debt. They need to show a complete chain of title, meaning documentation showing how the debt passed from the original creditor to them. If they cannot prove they own it, they may not be able to collect.
How to Stop Collector Contact
You’re not alone if you find collector calls stressful. Most people do. Here’s what you can do.
First, get the collector’s name, address, and the name of the original creditor. Write this down. Second, request a written verification of the debt within 30 days of their first contact. They must send you details about what you owe before continuing collection efforts.
If you want the calls to stop, send a written cease and desist letter by certified mail. Keep a copy and the delivery receipt. If they call after receiving that letter, you may have grounds to sue.
If you believe a collector has violated the law, you have a few options. You can file a complaint with the Maryland Attorney General’s Consumer Protection Division. Their hotline is 410-528-8662. You can also contact the Maryland Department of Labor’s Office of Financial Regulation. And you can hire an attorney to sue the collector directly.
Special Circumstances to Know About
A few edge cases worth knowing about.
Attorneys collecting debts in Maryland must be licensed to practice law in the state. Out-of-state attorneys cannot collect debts here without that license.
If a debt collector contacts a minor, they must direct communications to the minor’s parents or guardians.
There are no restrictions on collecting commercial debts, meaning debts between businesses. The MCDCA protects consumers, not companies.
If your debt was discharged in bankruptcy, a collector contacting you about it is violating federal law. That is called violating the automatic stay or the discharge injunction. It is a very serious violation.
Frequently Asked Questions
Can a debt collector call me at any time of day? No. Collectors can only call between 8 a.m. and 9 p.m. under federal law.
Can I stop all contact from a collection agency? Yes. Send them a written letter telling them to stop contacting you. They must comply, though they can still sue you.
How long does a collection agency have to sue me in Maryland? Three years from when the debt became due.
Can a debt collector contact my employer? Not before getting a court judgment against you. That is illegal under Maryland law.
What happens if I ignore a debt collection lawsuit? The court will likely rule against you automatically. Always respond to lawsuits, even if you dispute the debt.
Can medical debt hurt my credit score in Maryland? No. As of October 1, 2025, medical debt cannot be reported to credit bureaus in Maryland.
What if a collector calls me about a debt I already paid? Tell them in writing the debt is paid and send proof. If they keep calling, you may have grounds to sue them for harassment.
Final Thoughts
Now you know your rights. Maryland gives consumers strong protections against aggressive debt collectors. The rules are clear, and the penalties for breaking them are real.
If a collector is harassing you, making threats, or ignoring your requests to stop, you have options. Document everything. Send letters by certified mail. File complaints. And talk to an attorney if you think your rights have been violated.
Stay informed. When in doubt, look it up or ask a lawyer.
References
- Maryland Consumer Debt Collection Act – Md. Code, Commercial Law §§ 14-201 through 14-204: https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gcl§ion=14-202
- Maryland Office of Financial Regulation – Collection Agencies: https://www.labor.maryland.gov/finance/industry/collag.shtml
- Maryland People’s Law Library – Debt Collectors and the Law: https://www.peoples-law.org/debt-collectors-and-law
- Maryland OFR Guidance on New Medical Debt Laws (October 2025): https://www.consumerfinanceandfintechblog.com/2025/10/maryland-ofr-issues-guidance-on-new-medical-debt-collection-laws/
- Maryland Attorney General’s Consumer Protection Division: https://www.marylandattorneygeneral.gov/Pages/CPD/default.aspx
- Maryland Statute of Limitations on Debt – Md. Code, Courts and Judicial Proceedings § 5-101: https://www.peoples-law.org/time-limits-debts
