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What Should I Do if I'm Being Sued by a Debt Collector in Maryland?
When you are sued by a debt collector, court papers typically arrive without much explanation. The language is formal, deadlines are short, and the consequences can seem serious from the start. You might be worried about wage garnishment, frozen bank accounts, or added fees before you even understand what the lawsuit means.
As of 2025, Maryland debt collection cases continue to follow strict procedural rules, which makes it important to take the right steps early. If you have been served with a debt collection lawsuit, speaking with a Montgomery County, MD debt settlement lawyer can help you understand your options and decide how to respond.
What Does It Mean When a Debt Collector Files a Lawsuit Against You in Maryland?
When a debt collector files a lawsuit, they are asking the court to order you to pay an alleged debt. The complaint usually lists an amount owed and may include interest, fees, or court costs.
Stopping a Maryland Foreclosure: Chapter 7 or Chapter 13?
If you are a Maryland homeowner facing foreclosure, you may feel like the process is moving too fast for you to react. If you are considering filing for bankruptcy, both Chapter 7 and Chapter 13 bankruptcy offer powerful protections that can stop foreclosure procedures through the automatic stay. Bankruptcy can function as a legal "pause" button on foreclosure in both cases.
However, while both types of bankruptcy have this in common, one merely delays foreclosure, while the other can provide a long-term path to staying in your home. Understanding the distinction is essential to determining whether you can realistically keep your home. An experienced Charles County, MD consumer bankruptcy attorney can help you explore your options and make the best choice for a fresh financial start.
How Does the Foreclosure Process Work in Maryland?
Maryland’s non-judicial foreclosure system allows lenders to move quickly once a Notice of Intent to Foreclose and Order to Docket are filed. Homeowners may quickly face auction scheduling, escalating arrears and fees, and loss mitigation denials. Because the process goes so quickly, filing for bankruptcy can offer immediate relief and give you a bit of breathing room.
Why Early-Year Chapter 7 Filings Risk Losing Tax Refunds
Tax season is one of the busiest times for bankruptcy attorneys, but for some Maryland debtors, filing a Chapter 7 bankruptcy too early in the year can result in a costly surprise. Since Maryland’s wildcard exemption has a strict dollar cap, a large tax refund may exceed what you can legally protect, resulting in the loss of your tax return to the bankruptcy trustee.
Because of this, filing bankruptcy between January and March when you are expecting a sizeable refund can be risky – especially if you have earned-income credits, child tax credits, or multiple W-2 withholdings. It is extremely important that you fully understand how the wildcard works in Chapter 7 bankruptcy and how timing can potentially protect your refund. Your best course of action is to speak to an experienced Montgomery County Chapter 7 bankruptcy attorney to determine the best time to file.
Medical Debt Relief in Maryland Chapter 7: New Protections
As of 2024, 100 million Americans owed $220 billion in medical debt. This level of debt can have devastating impacts on the lives of these consumers, leaving them unable to borrow money for a home or car, and even being rejected for jobs they are otherwise qualified for due to poor credit reports. As many as 66.5 percent of all Americans who file for bankruptcy (550,000 per year) say that medical bills are the primary cause.
Maryland lawmakers are finally beginning to acknowledge the extent of the burden of medical debt. In 2024, the state’s new Hospital Patient Financial Protections law (Health-Gen Section 19-214.3) began restricting how hospitals and affiliated collectors can pursue unpaid medical bills. Maryland residents considering Chapter 7 bankruptcy should be aware that this law changes more than just billing practices.
When Debt Collectors Violate the Bankruptcy Stay in Maryland
The automatic stay is one of the strongest shields in bankruptcy, as an immediate court order that halts all collection efforts. Unfortunately, in Maryland and across the nation, some creditors and debt collectors push these legal limits, sending demand letters, garnishing wages, and making harassing phone calls after bankruptcy has been filed and the automatic stay has been issued.
Under federal law (11 U.S.C. Section 362(k)), debtors can recover damages for willful violations of the automatic stay. The state of Maryland goes a step further under the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act, which provide additional remedies when a debt collector crosses the line.
Maryland Chapter 13 Bankruptcy and Gig Economy Workers
While the U.S. statistics regarding freelance or gig workers vary, it is estimated that in 2024, between 57 and 70 million people in the U.S. were engaged in freelance work – a staggering 36 to 40 percent of the adult workforce. This trend is expected to grow, with some sources predicting as many as 87 million freelancers by 2027. While some freelancers are moonlighting from their "primary" job as a means of increasing their income, for a significant portion of gig workers, this is their only source of income.
The unusual income patterns of freelancers can make it challenging to propose a feasible Chapter 13 bankruptcy repayment plan. Bankruptcy courts generally lag behind in assessing "regular income" for plan feasibility. If you are struggling with debt as a Maryland freelancer, you can learn how bankruptcy might affect you by speaking with an experienced Charles County, MD consumer bankruptcy lawyer.
Can Chapter 7 Bankruptcy Halt Wage Garnishment in Maryland?
In Maryland, wages can be garnished due to unpaid child support, past-due taxes, or defaulted student loans. While your wages could also be garnished for credit card debt, medical debt, or personal loans, the creditor must first obtain a court-ordered judgment, so this is not as common.
The state of Maryland limits the amount that can be garnished to the lesser of 25 percent of your disposable wages or the amount exceeding 30 times the federal minimum wage. While that may not sound like much, in today’s economy, any amount taken from your check can make your financial situation even more precarious.
If you are thinking about filing for Chapter 7 bankruptcy, you may wonder whether wage garnishment will continue. Whatever your situation, filing for bankruptcy halts most wage garnishments through the automatic stay, allowing you to receive at least temporary relief.
Although the automatic stay legally requires creditors to cease most collection activities – including wage garnishment – you may still need to notify your employer’s payroll department. An experienced Prince George’s County, MD Chapter 7 bankruptcy attorney can help you determine whether your wage garnishment will halt when you file for bankruptcy.
Can Bankruptcy Clear Parking Tickets, Tolls, and Traffic Fines?
For drivers in Maryland and D.C., unpaid parking tickets, traffic fines, and toll violations may accumulate faster than they can be paid. Beyond the frustration of these costs, debts like this can lead to wage garnishments, vehicle towing, and even driver’s license suspensions. An individual who is considering filing for bankruptcy to achieve a fresh financial start may wonder whether these debts can be discharged through bankruptcy.
The answer to that question is more complex than it seems and depends on the type of violation, the chapter of bankruptcy filed, and how the courts treat government-related debts. Speaking to a knowledgeable Charles County, MD consumer bankruptcy attorney can help you decide whether bankruptcy is right for you, and, if so, which type of bankruptcy you should file.
How the Federal Bankruptcy Rule Affects Government Fines
Under 11.U.S.C.Section 523(a)(7), government fines and penalties are generally nondischargeable under Chapter 7. This includes parking tickets, moving-violation fines, and the penalty portion of toll violations. Chapter 13 bankruptcy is different: once you have completed your repayment plan, Chapter 13 discharge does not exclude these debts, meaning fines and penalties can be wiped out.
"Parking" Federal and State Refunds to Avoid Bankruptcy Loss
If you are considering bankruptcy and expecting a sizeable tax refund, you may wonder how you can protect that money. In some cases, parking the money can be a strategy to help you keep your refunds. Parking means using timing and exemptions to keep as much of your refund as the law allows, while avoiding fraud or hiding assets.
Under Maryland bankruptcy laws, state or federal tax refunds tied to income earned before you file are usually considered part of the bankruptcy estate. This makes them vulnerable unless they are spent on necessities before filing or protected by exemptions.
Both federal and state governments can also sometimes set off tax refunds against older tax debts, so this must also be planned for. Since bankruptcy laws can be complex, it is important to consult with an experienced Charles County, MD bankruptcy attorney.
When is Your Tax Refund at Risk?
Whether your state or federal tax refund is at risk during bankruptcy will depend on several factors, including whether you are filing for Chapter 7 or Chapter 13, and the timing of your filing relative to when you receive or expect your refund. In Chapter 7 bankruptcy, any income earned before filing (including a tax refund) is considered an asset of the bankruptcy estate, thus available to creditors unless specifically exempted.
Zombie Debt and Bankruptcy in Maryland
Perhaps you thought your debt was long gone because it has been years since you heard from the original creditor. Then a debt collector comes knocking to collect on what is known as "zombie debt." In Maryland, the term "zombie debt" refers to old, sometimes expired, even time-barred debt that a debt buyer attempts to revive. These debts are often for credit cards, personal loans, or medical bills that suddenly come to life after years of silence.
Even if the debt is no longer legally enforceable, you may still be under pressure from a debt collector to pay and possibly even threatened with a lawsuit. Depending on the amount of the zombie debt, as well as whether you are having trouble paying other current debts, filing for bankruptcy may offer some relief. A Charles County, MD bankruptcy lawyer can help you determine whether filing for bankruptcy is right for you.
How Do Debt Buyers Use Zombie Debt?
Zombie debt may originate from previously settled or discharged debt or debt buyers purchasing old debts. However, it can also occasionally result from fraud or identity theft. Debts are often sold to third-party debt collectors for mere pennies on the dollar.
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