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Attorney General Brian E. Frosh says there’s likely to be a "tsunami" of eviction cases caused by the economic devastation fueled by the coronavirus.

Md. Senate gives preliminary approval to debtor-protection bill

ANNAPOLIS – The Senate on Wednesday gave preliminary approval to legislation requiring third-party debt buyers to have full documentation that they are entitled to collect money owed, including papers stating the amount and source of the debt as well as proof that the debtor is in fact in arrears.

The Senate is expected to vote on final approval of Senate Bill 771 within the next few days. A cross-filed bill is pending in the House of Delegates as House Bill 1491.

The legislation was introduced in both houses at the request of Attorney General Brian E. Frosh, who cited his office’s investigation of the conduct of third-party debt buyers who he said bought for cents on the dollar overdue debts initially owed by consumers to banks and other lending agencies. The investigation revealed third-party debt buyers who had limited if any documentary evidence of money owed, Frosh said.

The paucity of documents – often just a spreadsheet — provided no certainty the named debtor owed money or the statute of limitations for collecting the debt had not passed, Frosh testified earlier this month before the Senate Judicial Proceedings Committee, which he chaired before his election as attorney general in 2014.

SB 771, as amended by the Senate committee, would require a third-party debt buyer to produce documents attesting to the agreement between the debtor and the original creditor. The debt buyer would also have to produce documents showing an itemization of all money claimed by the buyer, including principal, interest, finance charges, service charges, late fees and other fees or charges added to the principal by the original creditor and any subsequent assignees that preceded the buyer.

Under the committee amendments, the debt buyer would also have to list all Maryland collection-agency licenses it holds, including the license number, the name on the license and the license’s date of issue.

According to legislative analysts, Maryland’s commissioner of financial regulation received 375 written complaints about collection agencies in fiscal year 2015, which ended June 30.