Consumer Debt Relief

Consumer debt encompasses a large swath of personal debts – credit card debt, student loans, mortgages, payday loans, and auto loans, to name a few.


Unfortunately, there are a lot of reasons why you might get behind on your payments, or unable to make your past-due payments.  If this happens to you, there are a lot of legal options that exist to help those who are struggling to pay their consumer debts.

With consumer debt relief, you stand a strong chance at recovering your financial situation and planning for the future.

Debt Statistics

You’re not alone when it comes to dealing with consumer debt. The average debt for Maryland residents is $26,374, much higher than the national average of $15,185. Nearly 6% of consumers are also 90 days behind a payment. 

Credit card debt is a leading pitfall, with Maryland households having an average of $7,913 in debt. Most people with credit card debt use more than 30% of their available credit limit – which leads to low credit scores and fewer options for debt relief.

What are the best ways to handle this situation?

Luckily, there are a ton of options for consumer debt relief that are governed by Maryland and federal law.

Maryland Debt Relief Programs

Student Loan Debt Relief Tax Credit

This tax credit can help Maryland taxpayers who have incurred a set amount of debt from undergraduate or graduate student loans. To apply, you complete an application and send your student loan information, which includes:

  • Lender documents
  • Maryland Income Tax forms
  • College transcripts

Once your application gets approved, you’ll need to use the credit to pay off your college loan debt within two years. After making the loan payments, you’ll need to submit documentation proof to the Maryland High Education Commission (MHEC).

Should You Use the Tax Credit?

Yes, any Maryland taxpayer with at least $20,000 worth of student loan debt and at least $5,000 in outstanding student loan debt should take advantage of this program. Keep in mind that the MHEC will prioritize recipients who:

  • Graduated from a state institution of higher education
  • Did not receive any tax credit the year before applying
  • Have low income-to-debt burden ratios
  • Are eligible for in-state tuition

Consumer Credit Counseling

Credit counselors are trained professionals who will help simplify your debt repayment process. They usually offer Debt Management Plans (DMPs) that consolidate both unsecured debt and credit payments into one monthly payment. The advantages of these plans include:

  • The convenience of one monthly payment that covers all your creditors
  • Personalized budgeting guidance
  • Lower total monthly payments
  • Lower interest rates

Credit counseling also helps you pay off dues much faster. The average credit card takes two to three decades of minimum monthly payments to pay off, while DMPs aim for four to five years.

If you need help with consumer debt relief, or have any questions about what you’ve read on this page, please contact us!

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Should You Use Credit Counseling?

Credit counseling is an excellent consumer debt relief option if you want insight into your financial situation and are willing to receive professional recommendations for fixing your debt problem.

Keep in mind that most credit counselors don’t usually negotiate to reduce the amounts you owe. Instead, they lower your overall monthly payments by getting creditors to raise the deadline of your payments and lessen the interest rates.

Debt Consolidation

You can consolidate debts from multiple creditors by getting a large loan and using it to pay everything you owe. This way, you have fewer payments to keep track of each month while potentially lowering the interest you have to pay. Debt consolidation also helps cut down letters and calls from collection agencies, provided that you diligently pay off your new loan.

Most people who take this route focus on tackling unsecured debt because of the high interest rates that typically come with obligations like:

  • payday loans
  • student loans
  • credit card debts

Should You Use Debt Consolidation?

Debt consolidation is a solid option if you have multiple debts with high-interest rates – especially those that total over $10,000. As long as you don’t take additional debt, you can look forward to becoming debt-free faster.

Keep in mind that effective debt consolidation requires a high credit score. In general, having a score lower than 700 will limit your options to high-interest lenders. So your debt consolidation loan might equal – or worse, exceed – the interest rates of your original debts.

Debt Settlement

Debt settlement is the process of lowering your total dues through negotiation. This plan is only possible if you have a delinquent debt – meaning you have missed payment deadlines. 

Lenders will be more likely to agree with your settlement if they feel that no other options exist to recoup your original debt total. When both parties accept the deal, the borrower usually pays the settlement in a lump sum. 


While you have the option of negotiating with the lender yourself, these deals are best handled by legal assistance. With an experienced professional, you can potentially receive a more favorable settlement that assists you in the consumer debt relief process, and helps lower not only your financial burden, but your stress levels as well. 


Should You Use Debt Settlement?

Debt settlements often involve modifying an original contract, and this can adversely impact your credit score. Having a debt settlement on your record might also make lenders wary about granting you credit in the future.


Regardless, it might still be worth lowering your credit score if it means significantly reducing your financial burdens. Debt settlement is a wise choice for those who already have a lower credit score, which is likely if you have account balances and delinquent accounts.  


One thing to be wary of when dealing with debt settlement companies is if they require you to pay them, and they hold your funds until a settlement can be reached.  This can trigger a creditor to file a lawsuit against you if you do not pay for a prolonged period while saying up to make the lump sum offer.  Avoid this type of solution at all costs.

Consumer Debt Relief Related Laws

Both federal and state legislations exist to protect consumers dealing with debt. Here are just some of the consumer protection laws that every Maryland resident should be familiar with:

Fair Debt Collection Practices Act (FDCPA)


The Federal Trade Commission (FTC) oversees the FDCPA, a law that helps protect consumers from harassing lenders out to collect a debt. The most common violations include:

  • Making demands for amounts that aren’t under contractual obligations
  • Harassing debtors (regularly contacting them by phone, visiting their property, etc.)
  • Not sending consumers written notice of their debt

Maryland's Consumer Debt Collection Act

Aside from the FDCPA, Maryland has laws that provide additional consumer protection and cover both debt collectors and creditors. The state also requires the licensing and regulation of every collection agency in the area.

There is also dollar limit to most exemptions. You can only take an exemption up to the specific dollar amount of equity in the property.

The Maryland Consumer Debt Collection Act forbids the following acts by creditors pursuing debtors who may require consumer debt relief:


Collectors can’t intimidate debtors by threatening violence, criminal persecution, or disclosing false information that can harm the debtor’s reputation for creditworthiness. This act also bars them from using abusive language – including profanity and obscenity – when communicating with a debtor or their relatives.

Third-Party Communications

Collectors can’t threaten to contact third parties – like an employer or business partner – to undermine a debtor’s reputation. Collectors are also forbidden from communicating with a debtor’s employer unless they have a court judgment allowing them to do so.


Creditors and debtors can’t deceive debtors into paying their dues. This rule includes claiming a right that doesn’t exist, enforcing said right, and sending written communication that emulates a judicial process from a lawyer, court, or government entity.

Maryland Payday Loan Regulations

Maryland bans payday loan services, and any lender that wants to operate within the state needs to comply with a monthly percentage charging cap of 2.75% per month. Any lender who charges more than this is violating the law.

Maryland Debt Settlement Services Act

Per this law, every debt settlement company in Maryland needs to register with the Commissioner of Financial Regulation before offering its services. This act helps debtors from being tricked by fraudulent companies.

Debt settlement services can only receive money from consumers to settle their debts if they:

  • Have a separate bank account for holding the money
  • Make no more than six settlement payments per debt
  • Work with creditors to lower the debt principal

Maryland Debt Management Service Laws

Debt management services are different from debt settlement under Maryland law. The former involves taking payments and distributing them to creditors, while the latter requires additional negotiation to lower a consumer’s debt.

Debt management service laws include:

  • Prohibiting debt management companies from giving  credit or lending money to customers
  • Placing a $50 limit and $40 limit on one-time consultation fees and monthly service fees, respectively
  • Providing customers the ability to rescind their contract without a penalty

Maryland Statute of Limitations on Debt

A time limit exists for a creditor to sue a debtor. In Maryland, the statute of limitations requires creditors to file a lawsuit within three years for open accounts and written contracts. However, it doesn’t restrict creditors from contacting the debtor or reporting debts to credit reporting agencies.

Should You Hire a Consumer Debt Relief Attorney?

The Phillips Law Office has more than two decades of experience helping people struggling with their financial situation. If you have incurred a lot of debt and don’t know how to proceed, we can formulate and execute a plan of action that targets your specific problem.


Aside from providing financial advice, our attorneys will also review your case and look for any law violations that we can use to ease your monetary burdens.  For instance, a lender may lower your debt or dismiss it entirely in exchange for removing their liability for legal violations.


Fill out the form below to receive your free consumer debt relief consultation!

It would be best if you also listed specific contingent debts like personal guaranties not yet come due. Since the bankruptcy laws want you to list every debt, you cannot choose which debts you want to list. You also don’t have the chance to leave off any credit accounts to maintain an active credit card after bankruptcy when filing a bankruptcy.

Even if you don’t report your credit cards on the bankruptcy schedules, they will most likely be deactivated after the filing date. There’s a chance to file an amendment to add the creditors in your petition if you inadvertently leave creditors off your filing.

Committed to helping our clients with consumer debt relief.

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Phillips Law Office offers a free initial consultation with no strings attached. Our Maryland consumer debt relief lawyers will examine your case and give you a possible course of action.

There’s also more we can do for you. Get in touch, and let’s start with a conversation about your debts.

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