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Thousands of Debt Collection Cases Dismissed by Maryland District Court Pursuant to Settlement Agreement with Debt Collection Agencies

Published on Jul 17, 2012 at 12:08 pm in General Blogs.

The following announcementwas issued by the Maryland Judiciary in its Website which affects thousands ofconsumer debtors and is reproduced here in its entirety:

“(ANNAPOLIS, Md. – July 11, 2012)On July 10, Chief Judge Ben C. Clyburn of the District Court of Marylanddismissed 3,564 debt collection cases against Maryland residents. Judge Clyburn’s ordercomes after a settlement agreement with the debt collection agencies LVNV andResurgent Capital Services.

As part of the agreement reached with the Maryland State Collection Agency Licensing Board, LVNV and Resurgent will pay $1 million to the state and agreed to the dismissal of cases pending in Maryland District Court. Also, $3.8 million in credit will be applied to the accounts of 6,246 consumers whose cases have been adjudicated or settled. The settlement came after claims that LVNV and Resurgent violated state and federal laws about licensure and submitting false or misleading claims or affidavits in court.

LVNV is part of a newindustry – “debt buying,” – that has clogged the dockets of small claims courts in Maryland and throughout the country, particularly during the current recession. Debt buyers specialize in buying debts that have been abandoned by the original creditors, usually credit card companies, for a tiny fraction of the amount owed. Debts may be sold to other debt buyers several times, and the documentation to prove the debt is owed sometimes is little more than the person’s name, last known address and Social Security number.

“In this currentrecessionary economy, the District Court has been seeing an increasing numberof debt collection cases,” Judge Clyburn said. “We have been responding to manyissues related to debt-buying and we now have new rules in place that help makethe process more transparent, give the judge more information, and level theplaying field for consumers.”

The 3,564 cases dismissed yesterdaywere dismissed before judgment and “without prejudice,” which means a case iseligible to be re-filed in the future.

Defendants whose cases have been dismissed or who will receive a credit will receive written notification from the District Court of Maryland. To get more information, Maryland residents should contact the local DistrictCourt location where the debt collection case was filed. In addition to sending written notices to the people affected by this settlement, the District Court is directing that court records and the Judiciary Case Search publicrecords website be updated to show the dismissals. The records should be updated within the next month.”

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