LAWRENCE J. HOGAN, JR., Governor Ch. 618
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Chapter 618
(House Bill 128)
AN ACT concerning
Debt Settlement Services – Student Education Loan Debt Relief – Disclosures
and Prohibitions
FOR the purpose of applying certain provisions of law regarding debt settlement services
to student education loan debt relief; requiring a person registered to provide debt
settlement services to make certain disclosures to consumers relating to student
education loan debt; requiring that an advertisement for debt settlement services for
student education loan debt relief include a certain disclosure; prohibiting debt
settlement services providers from taking certain actions with respect to student
education loan debt relief; and generally relating to student education loan debt and
debt settlement services.
BY repealing and reenacting, without amendments,
Article – Financial Institutions
Section 2–104.1(a)
Annotated Code of Maryland
(2020 Replacement Volume and 2021 Supplement)
BY repealing and reenacting, with amendments,
Article – Financial Institutions
Section 12–1001, 12–1012, and 12–1013
Annotated Code of Maryland
(2020 Replacement Volume and 2021 Supplement)
BY adding to
Article – Financial Institutions
Section 12–1012.1
Annotated Code of Maryland
(2020 Replacement Volume and 2021 Supplement)
BY renumbering
Article – Financial Institutions
Section 12–1001(l)
to be Section 12–1001(m)
Annotated Code of Maryland
(2020 Replacement Volume and 2021 Supplement)
BY repealing and reenacting, without amendments,
Article – Financial Institutions
Section 2–104.1(a)(1) and (3) and 12–1001(a)
Annotated Code of Maryland Ch. 618 2022 LAWS OF MARYLAND
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(2020 Replacement Volume and 2021 Supplement)
BY adding to
Article – Financial Institutions
Section 12–1001(l) and 12–1012.1
Annotated Code of Maryland
(2020 Replacement Volume and 2021 Supplement)
BY repealing and reenacting, with amendments,
Article – Financial Institutions
Section 12–1012 and 12–1013
Annotated Code of Maryland
(2020 Replacement Volume and 2021 Supplement)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That the Laws of Maryland read as follows:
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That Section(s) 12–1001(l) of Article – Financial Institutions of the Annotated Code of
Maryland be renumbered to be Section(s) 12–1001(m).
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read
as follows:
Article – Financial Institutions
2–104.1.
(a) (1) In this section the following words have the meanings indicated.
(2) “Servicing” means:
(i) Receiving scheduled periodic payments from a student loan
borrower according to the terms of a student education loan;
(ii) Applying the payments according to the student education loan
terms; and
(iii) Performing other administrative services.
(3) “Student education loan” means any loan, notwithstanding any election
of law or designation of status in any contract, used for financing postsecondary education
or other postsecondary school–related expenses.
(4) “Student loan borrower” means:
LAWRENCE J. HOGAN, JR., Governor Ch. 618
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(i) A resident of the State who has received or agreed to pay a
student education loan; or
(ii) A resident who shares repayment responsibility with a resident
described under item (i) of this paragraph.
(5) “Student Loan Ombudsman” means an individual, whether a paid
employee or a volunteer, whom the Commissioner designates to serve as a liaison between
student loan borrowers and student loan servicers.
(6) (i) “Student loan servicer” means a person, regardless of location,
responsible for servicing a student education loan to a student loan borrower.
(ii) “Student loan servicer” includes a trust entity performing or
receiving the benefit of student education loan servicing.
12–1001.
(a) In this subtitle the following words have the meanings indicated.
(b) (1) “Consumer” means an individual who:
[(1)] (I) Resides in the State; and
[(2)] (II) Is seeking debt settlement services or has entered into a debt
settlement services agreement in connection with debts that are consumer debts, as defined
in § 13–101 of the Commercial Law Article.
(2) “CONSUMER” INCLUDES A STUDENT L OAN BORROWER AS
DEFINED IN § 2–104.1 OF THIS ARTICLE.
(c) “Debt management services” has the meaning stated in § 12–901 of this title.
(d) (1) “Debt settlement services” means any service or program represented,
directly or by implication, to renegotiate, settle, reduce, or in any way alter the terms of
payment or other terms of a debt between a consumer and one or more unsecured creditors
or debt collectors, including a reduction in the balance, interest rate, or fees owed by a
consumer to an unsecured creditor or debt collector.
(2) “DEBT SETTLEMENT SERVI CES” INCLUDES STUDENT EDU CATION
LOAN DEBT RELIEF .
[(2)] (3) “Debt settlement services” does not include [debt]:
(I) DEBT management services;
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(II) SERVICES OF A STUDENT LOAN SERVICER ; OR
(III) SERVICES OF AN ORIGIN ATOR, A GUARANTOR , OR A
SERVICER OF FEDERAL EDUCATION LOANS OR P RIVATE EDUCATION LOA NS.
(e) “Debt settlement services agreement” means a written contract, plan, or
agreement between a debt settlement services provider and a consumer for the performance
of debt settlement services.
(f) “Debt settlement services fee” means a fee charged to a consumer by a debt
settlement services provider for providing debt settlement services for a consumer.
(g) (1) “Debt settlement services provider” means a person that provides or
offers to provide debt settlement services for a consumer regardless of whether the person
provides the debt settlement services on a for–profit or not–for–profit basis.
(2) “DEBT SETTLEMENT SERVI CES PROVIDER” INCLUDES A PERSON
THAT:
(I) ENGAGES IN OR HOLDS I TSELF OUT AS ENGAGING IN THE
BUSINESS OF STUDENT EDUCATION LOAN DEBT RELIEF IN EXCHANGE F OR A FEE OR
COMPENSATION ASSESSE D AGAINST OR CHARGED TO A CONSUMER ; OR
(II) SOLICITS FOR OR ACTS ON BEHALF OF A PERSO N ENGAGING
IN ACTIVITIES DESCRI BED UNDER ITEM (I) OF THIS PARAGRAPH .
(3) “DEBT SETTLEMENT SERVI CES PROVIDER ” DOES NOT INCLUDE
AN INSTITUTION OF HI GHER EDUCATION AS DE FINED IN THE FEDERAL HIGHER
EDUCATION ACT OF 1965.
(h) “Dedicated account” means an account described in § 12–1010(d) of this
subtitle.
(i) “Offer, provide, or attempt to provide debt settlement services” means
providing debt settlement services:
(1) To consumers through any means, including telephone telemarketing,
Internet solicitation, and face–to–face meetings; and
(2) On an intrastate or interstate basis.
(j) “Principal amount of the debt” means the amount of a debt at the time the
debt is included in a debt settlement services agreement.
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(k) “Registrant” means a person registered under this subtitle to provide debt
settlement services.
(L) “STUDENT EDUCATION LOA N” HAS THE MEANING STAT ED IN §
2–104.1(A) OF THIS ARTICLE.
(M) “STUDENT EDUCATION LOA N DEBT RELIEF ” MEANS OFFERING TO
PROVIDE ADVICE OR SE RVICE, OR ACTING AS AN INTE RMEDIARY BETWEEN OR ON
BEHALF OF A CONSUMER AND THE UNITED STATES DEPARTMENT OF EDUCATION,
ANY ORIGINATOR OR GU ARANTOR OF FEDERAL E DUCATION LOANS , OR A STUDENT
LOAN SERVICER , IN EXCHANGE FOR A FE E OR COMPENSATION AS SESSED AGAINST
OR CHARGED TO A CONS UMER, IN ORDER TO:
(1) NEGOTIATE, ARRANGE, OR OBTAIN:
(I) A SETTLEMENT , ADJUSTMENT , DISCHARGE, OR
SATISFACTION OF A CO NSUMER’S STUDENT EDUCATION LOAN IN AN AMOUNT LE SS
THAN THE FULL AMOUNT OF THE PRINCIPAL AMO UNT OF THE DEBT OR T HE
CURRENT OUTSTANDING BALANCE OF THE DEBT ; OR
(II) A REDUCTION OR ALTERATION IN :
1. THE AMOUNT OF MONTHLY PAYMENT OF FEES ; OR
2. THE AMOUNT OF INTERES T OWED;
(2) ENROLL A CONSUMER IN A REPAYMENT PLAN , FORBEARANCE , OR
DEFERMENT OF A STUDE NT EDUCATION LOAN ;
(3) APPLY FOR CONSOLIDATI ON OF OR CONSOLIDATE A CONSUMER’S
STUDENT EDUCATION LO AN; OR
(4) OFFER TO PROVIDE ANY OTHER SERVICE RELATI NG TO ALTERING
THE TERMS OF A CONSU MER’S STUDENT EDUCATION LOAN, INCLUDING A
REDUCTION IN THE AMO UNT OF:
(I) INTEREST OWED BY THE CONSUMER ;
(II) THE PRINCIPAL BAL ANCE OF THE STUDENT EDUCATION
LOAN; OR
(III) A MONTHLY PAYMENT OR F EE.
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(N) “STUDENT LOAN SERVICER ” HAS THE MEANING STAT ED IN § 2–104.1(A)
OF THIS ARTICLE.
[(l)] (O) “Unique identifier” means a number or another identifier assigned by
NMLS.
2–104.1.
(a) (1) In this section the following words have the meanings indicated.
(3) “Student education loan” means any loan, notwithstanding any election
of law or designation of status in any contract, used for financing postsecondary education
or other postsecondary school–related expenses.
12–1001.
(a) In this subtitle the following words have the meanings indicated.
(L) “STUDENT EDUCATION LOA N” HAS THE MEANING STAT ED IN §
2–104.1(A) OF THIS ARTICLE.
12–1012.
(a) A debt settlement services agreement shall:
(1) Be signed and dated by the registrant and the consumer; and
(2) Include, in at least 12 point type:
(i) The name, address, and telephone number of the consumer;
(ii) The name, address, and telephone number of the registrant;
(iii) A description of the debt settlement services to be provided to the
consumer;
(iv) 1. Any debt settlement services fees to be charged to the
consumer; and
2. A statement that the registrant may not:
A. Charge the consumer a fee for consultation or for obtaining
a consumer’s credit report; or
B. Require a voluntary contribution from the consumer for
any service provided by the registrant; LAWRENCE J. HOGAN, JR., Governor Ch. 618
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(v) The identity of each individual creditor or debt collector whose
debts are included in the debt settlement services agreement and the principal amount of
the debt owed to each individual creditor or debt collector;
(vi) The principal amount of the total debt included in the debt
settlement services agreement;
(vii) A good faith estimate of the amount of time necessary to achieve
the represented results;
(viii) To the extent that the debt settlement services may include a
debt settlement offer to any of the consumer’s creditors or debt collectors, a good faith
estimate of:
1. The time by which the registrant will make a bona fide
debt settlement offer to each of them; and
2. The amount of money or percentage of each debt that the
consumer must accumulate before the registrant will make a bona fide debt settlement
offer to each of them;
(ix) A statement that:
1. The consumer may withdraw from the debt settlement
services agreement at any time; and
2. If a consumer withdraws from the debt settlement services
agreement, the registrant:
A. May not charge a penalty; and
B. May collect debt settlement services fees earned by the
registrant;
(X) FOR A DEBT SETTLEMENT SERV ICES AGREEMENT FOR
STUDENT EDUCATION LO AN DEBT RELIEF , A STATEMENT IN SUBST ANTIALLY THE
FOLLOWING FORM :
“(NAME OF COMPANY ) IS A PRIVATE COMPANY , AND IS NOT AFFILIATE D WITH
THE UNITED STATES DEPARTMENT OF EDUCATION OR ANY OTHE R ACADEMIC
ENTITY OR GOVERNMENT AL AGENCY. (NAME OF COMPANY ) IS NOT A LENDER ,
GUARANTOR , OR SERVICER OF FEDER AL STUDENT LOANS . YOU CAN APPLY FOR
CONSOLIDATION AND OT HER REPAYMENT PLANS WITHOUT PAID ASSISTA NCE
THROUGH THE UNITED STATES DEPARTMENT OF EDUCATION. MORE
INFORMATION IS AVAILA BLE ON THE DEPARTMENT ’S WEBSITE OR THROUGH YOUR Ch. 618 2022 LAWS OF MARYLAND
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FEDERAL STUDENT LOAN SERVICER. YOU CAN FIND OUT WHO YOUR SERVICER IS
THROUGH THE UNITED STATES DEPARTMENT OF EDUCATION.”;
[(x)] (XI) If the registrant requests or requires the consumer to
deposit funds in a dedicated account, a statement that:
1. The consumer owns the funds held in the account,
including any accrued interest; and
2. If the consumer requests to withdraw from the debt
settlement services agreement, within 7 days after the request, all funds in the account,
including accrued interest, less any debt settlement services fees earned by the registrant
in compliance with § 12–1010 of this subtitle, must be paid to the consumer; and
[(xi)] (XII) A statement that the consumer may be required to pay
taxes on the amount by which the consumer’s debt is reduced.
(b) (1) The disclosures required under subsection (a)(2)(vii) through [(xi)] (XII)
of this section shall be provided to the consumer in a clear and conspicuous manner in the
debt settlement services agreement.
(2) A REGISTRANT REQUIRED TO MAKE A DISCLOSURE UNDER
SUBSECTION (A)(2)(X) OF THIS SECTION SHAL L MAKE SUBSTANTIALLY THE SAME
STATEMENT ORALLY TO THE CONSUMER BEFORE THE AGREEMENT IS SIG NED.
12–1012.1.
A DEBT SETTLEMENT SERV ICES PROVIDER ENGAGE D IN STUDENT EDUCATI ON
LOAN DEBT RELIEF MAY NOT:
(1) ADVISE, EXPRESSLY OR BY IMPL ICATION, THAT A CONSUMER
STOP MAKING PAYMENTS OR STOP COMMUNICATIN G WITH THE CONSUMER ’S
STUDENT LOAN SERVICE R; OR
(2) ACCESS OR OBTAIN A CONSUMER ’S STUDENT AID INFORM ATION
IN VIOLATION OF FEDE RAL LAW.
12–1013.
(A) An advertisement for debt settlement services shall include clearly and
conspicuously a disclosure that, to the extent that any aspect of the debt settlement services
relies on or results in the consumer’s failure to make timely payments to the consumer’s
creditors or debt collectors, the use of the debt settlement services:
(1) Will likely adversely affect the consumer’s creditworthiness; LAWRENCE J. HOGAN, JR., Governor Ch. 618
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(2) May result in the consumer being subject to collections or being sued by
creditors or debt collectors; and
(3) May increase the amount of money the consumer owes due to the
accrual of fees and interest by creditors or debt collectors.
(B) AN ADVERTISEMENT FOR DEBT SETTLEMENT SERVICES FOR STUDENT
EDUCATION LOAN DEBT RELIEF SHALL INCLUDE CLEARLY AND CONSPICU OUSLY A
DISCLOSURE IN SUBSTA NTIALLY THE FOLLOWIN G FORM:
“(NAME OF COMPANY ) IS A PRIVATE COMPANY , AND IS NOT AFFILIATE D WITH
THE UNITED STATES DEPARTMENT OF EDUCATION OR ANY OTHER ACADEMI C
ENTITY OR GOVERNMENT AL AGENCY. (NAME OF COMPANY ) IS NOT A LENDER ,
GUARANTOR , OR SERVICER OF FEDER AL STUDENT LOANS . YOU CAN APPLY FOR
CONSOLIDATION AND OT HER REPAYMENT PLANS WITHOUT PAID ASSISTA NCE
THROUGH THE UNITED STATES DEPARTMENT OF EDUCATION. MORE
INFORMATION IS AVAIL ABLE ON THE DEPARTMENT ’S WEBSITE OR THROUGH YOUR
FEDERAL STUDENT LOAN SERVICER. YOU CAN FIND OUT WHO YOUR SERVICER IS
THROUGH THE UNITED STATES DEPARTMENT OF EDUCATION.”.
SECTION 2. 3. AND BE IT FURTHER ENACTED, Th at this Act shall take effect
October 1, 2022.
Enacted under Article II, § 17(c) of the Maryland Constitution, May 29, 2022.