EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0732*
SENATE BILL 732
D3, F2, I3 2lr2160
HB 26/21 – APP & JUD CF HB 111
By: Senators Watson, Lee, Pinsky, Rosapepe, Smith, and Waldstreicher
Introduced and read first time: February 7, 2022
Assigned to: Judicial Proceedings
A BILL ENTITLED
AN ACT concerning 1
Action to Collect a Private Education Loan – Required Documents 2
FOR the purpose of prohibiting private education lenders and private education loan 3
collectors from initiating a certain action unless the private education lenders or 4
private education loan collectors possess certain documents; requiring a private 5
education lender or private education loan collector to introduce certain information 6
in a certain action; requiring a private education loan collector to provide certain 7
information to a student loan borrower in a certain communication and on request 8
of the student loan borrower; and generally relating to documents required in an 9
action to collect a private education loan. 10
BY adding to 11
Article – Courts and Judicial Proceedings 12
Section 5–1301 through 5–1304 to be under the new subtitle “Subtitle 13. Action to 13
Collect a Private Education Loan” 14
Annotated Code of Maryland 15
(2020 Replacement Volume and 2021 Supplement) 16
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 17
That the Laws of Maryland read as follows: 18
Article – Courts and Judicial Proceedings 19
SUBTITLE 13. ACTION TO COLLECT A PRIVATE EDUCATION LOAN. 20
5–1301. 21
(A) IN THIS SUBTITLE THE FO LLOWING WORDS HAVE T HE MEANINGS 22
INDICATED. 23
2 SENATE BILL 732
(B) (1) “COSIGNER” MEANS AN INDIVIDUAL WHO IS LIABLE FOR TH E 1
OBLIGATION OF ANOTHE R WITHOUT COMPENSATI ON, REGARDLESS OF HOW TH E 2
INDIVIDUAL IS DESIGN ATED IN THE AGREEMEN T WITH RESPECT TO TH AT 3
OBLIGATION. 4
(2) “COSIGNER” INCLUDES: 5
(I) AN INDIVIDUAL WHO IS LIABLE FOR AN OBLIGA TION UNDER 6
A PRIVATE EDUCATION LOAN EXTENDED TO CON SOLIDATE A BORROWER ’S 7
PREEXISTING PRIVATE EDUCATION LOANS ; AND 8
(II) AN INDIVIDUAL WHOSE S IGNATURE IS REQUESTE D AS A 9
CONDITION TO GRANT C REDIT OR TO FORBEAR FROM COLLECTION . 10
(3) “COSIGNER” DOES NOT INCLUDE THE SPOUSE OF AN INDIVID UAL 11
UNDER PARAGRAPH (1) OF THIS SUBSECTION . 12
(C) (1) “CREDITOR” MEANS: 13
(I) THE ORIGINAL CREDITOR , IF OWNERSHIP OF A PR IVATE 14
EDUCATION LOAN HAS N OT BEEN SOLD, ASSIGNED, OR TRANSFERRED ; 15
(II) THE PERSON, NONDEPOSITORY INSTIT UTION, OR TRUST 16
ENTITY THAT OWNED THE PRIVA TE EDUCATION LOAN AT THE TIME THE PRIVATE 17
EDUCATION LOAN DEFAU LTED, EVEN IF THE PERSON , NONDEPOSITORY 18
INSTITUTION, OR TRUST ENTITY DID NOT ORIGINATE TH E PRIVATE EDUCATION 19
LOAN IF THE PRIVATE EDUCATION LOAN WAS N OT SUBSEQUENTLY SOLD , 20
TRANSFERRED , OR ASSIGNED; OR 21
(III) A PERSON, NONDEPOSITORY INSTIT UTION, OR TRUST 22
ENTITY THAT PURCHASED A DEF AULTED PRIVATE EDUCA TION LOAN FOR 23
COLLECTION PURPOSES , REGARDLESS OF WHETHE R THE PERSON, NONDEPOSITORY 24
INSTITUTION, OR TRUST ENTITY : 25
1. COLLECTED THE PRIVATE EDUCATION LOAN ; 26
2. HIRED A THIRD PARTY T O COLLECT THE PRIVAT E 27
EDUCATION LOAN ; OR 28
3. HIRED AN ATTORNEY FOR COLLECTION LITIGATIO N. 29
(2) “CREDITOR” DOES NOT INCLUDE : 30
(I) A BANK AS DEFINED IN T HE FEDERAL DEPOSIT INSURANCE 31 SENATE BILL 732 3
ACT; OR 1
(II) A FEDERAL CREDIT UNION OR STATE CREDIT UNIO N AS 2
THOSE TERMS ARE DEFI NED IN THE FEDERAL CREDIT UNION ACT. 3
(D) “ORIGINAL CREDITOR” MEANS THE PRIVATE ED UCATION LENDER 4
IDENTIFIED IN THE PR OMISSORY NOTE , LOAN AGREEMENT , OR LOAN CONTRACT 5
ENTERED INTO WITH A STUDENT LOAN BORROWE R OR COSIGNER . 6
(E) (1) “PRIVATE EDUCATION LEN DER” MEANS: 7
(I) A PERSON, NONDEPOSITORY INSTIT UTION, OR TRUST 8
ENTITY ENGAGED IN THE BUSIN ESS OF SECURING , MAKING, OR EXTENDING PRIVATE 9
EDUCATION LOANS ; OR 10
(II) A HOLDER OF A PRIVATE EDUCATION LOAN . 11
(2) “PRIVATE EDUCATION LEN DER” DOES NOT INCLUDE : 12
(I) A BANK AS DEFINED IN T HE FEDERAL DEPOSIT INSURANCE 13
ACT; OR 14
(II) A FEDERAL CREDIT UNION OR STATE CREDIT UNIO N AS 15
THOSE TERMS ARE DEFI NED IN THE FEDERAL CREDIT UNION ACT. 16
(F) “PRIVATE EDUCATION LOA N” MEANS AN EXTENSION O F CREDIT THAT: 17
(1) IS NOT MADE, INSURED, OR GUARANTEED UNDER TITLE IV OF 18
THE HIGHER EDUCATION ACT OF 1965; 19
(2) IS EXTENDED TO A CONS UMER EXPRESSLY , WHOLLY OR PARTLY , 20
FOR POSTSECONDARY ED UCATIONAL EXPENSES , REGARDLESS OF WHETHE R THE 21
LOAN IS PROVIDED BY THE INSTITUTION THAT THE STUDENT ATTENDS ; 22
(3) DOES NOT INCLUDE OPEN –END CREDIT OR ANY LO AN THAT IS 23
SECURED BY REAL PROP ERTY OR A DWELLING ; AND 24
(4) DOES NOT INCLUDE AN E XTENSION OF CREDIT I N WHICH THE 25
COVERED INSTITUTION IS THE CREDITOR IF: 26
(I) THE TERM OF THE EXTEN SION OF CREDIT IS NO T MORE 27
THAN 90 DAYS; OR 28
(II) AN INTEREST RATE WILL NOT BE APPLIED TO TH E CREDIT 29 4 SENATE BILL 732
BALANCE AND THE TERM OF THE EXTENSION OF CREDIT IS NOT MORE T HAN 1 YEAR, 1
EVEN IF THE CREDIT I S PAYABLE IN MORE TH AN FOUR INSTALLMENTS . 2
(G) “PRIVATE EDUCATION LOA N COLLECTION ACTION ” MEANS A JUDICIAL 3
ACTION IN WHICH A CLAIM IS ASSERTED TO COLLE CT A PRIVATE EDUCATI ON LOAN. 4
(H) (1) “PRIVATE EDUCATION LOA N COLLECTOR ” MEANS A PERSON , 5
NONDEPOSITORY INSTIT UTION, OR TRUST ENTITY THAT COLLECTS OR ATT EMPTS TO 6
COLLECT ON A DEFAULT ED PRIVATE EDUCATION LOAN. 7
(2) “PRIVATE EDUCATION LOA N COLLECTOR ” DOES NOT INCLUDE : 8
(I) A BANK AS DEFINED IN T HE FEDERAL DEPOSIT INSURANCE 9
ACT; OR 10
(II) A FEDERAL CREDIT UNION OR STATE CREDIT UNIO N AS 11
THOSE TERMS ARE DEFI NED IN THE FEDERAL CREDIT UNION ACT. 12
(I) “STUDENT LOAN BORROWER ” MEANS AN INDIVIDUAL WHO RECEIVES OR 13
AGREES TO PAY A PRIV ATE EDUCATION LOAN . 14
5–1302. 15
(A) A PRIVATE EDUCATION LE NDER OR A PRIVATE ED UCATION LOAN 16
COLLECTOR MAY NOT IN ITIATE A PRIVATE EDU CATION LOAN COLLECTI ON ACTION 17
UNLESS THE PRIVATE E DUCATION L ENDER OR PRIVATE EDU CATION LOAN 18
COLLECTOR POSSESSES ALL OF THE DOCUMENTS DESCRIBED UNDER SUBS ECTION 19
(B)(3) OF THIS SECTION. 20
(B) (1) THIS SUBSECTION APPLI ES: 21
(I) TO A PRIVATE EDUCATION LOAN COLLECTION ACTI ON, 22
INCLUDING A SMALL CL AIM ACTION UNDER § 4–405 OF THIS ARTICLE , THAT IS 23
MAINTAINED BY A PRIV ATE EDUCATION LENDER OR A PRIVATE EDUCATI ON LOAN 24
COLLECTOR; AND 25
(II) REGARDLESS OF THE LEG AL STATUS OF THE TRU ST’S 26
TRUSTEE. 27
(2) IN ADDITION TO ANY OT HER PROVISION OF LAW , A COURT MAY 28
NOT ENTER A JUDGME NT IN FAVOR OF A PRI VATE EDUCATION LENDE R OR A 29
PRIVATE EDUCATION LO AN COLLECTOR UNLESS THE PRIVATE EDUCATIO N LENDER 30
OR PRIVATE EDUCATION LOAN COLLECTOR INTRO DUCES INTO EVIDENCE THE 31
DOCUMENTS SPECIFIED IN PARAGRAPH (3) OF THIS SUBSECTION I N ACCORDANCE 32 SENATE BILL 732 5
WITH THE RULES OF EVIDENC E APPLICABLE TO ACTI ONS THAT ARE NOT SMA LL 1
CLAIMS ACTIONS BROUG HT UNDER § 4–405 OF THIS ARTICLE. 2
(3) THE PRIVATE EDUCATION LENDER OR PRIVATE ED UCATION LOAN 3
COLLECTOR SHALL INTR ODUCE THE FOLLOWING EVIDENCE IN A PRIVAT E 4
EDUCATION LOAN COLLECTION ACTION : 5
(I) THE NAME OF THE OWNER OF THE PRIVATE EDUCA TION 6
LOAN; 7
(II) THE ORIGINAL CREDITOR ’S NAME AT THE TIME O F 8
DEFAULT, IF APPLICABLE; 9
(III) IF THE ORIGINAL CREDI TOR USED AN ACCOUNT NUMBER AT 10
THE TIME OF DEFAULT , THE LAST FOUR DIG ITS OF THE ORIGINAL CREDITO R’S 11
ACCOUNT NUMBER ; 12
(IV) THE AMOUNT DUE AT DEF AULT; 13
(V) AN ITEMIZATION OF INT EREST AND FEES , IF ANY, 14
INCURRED AFTER DEFAU LT THAT ARE CLAIMED TO BE OWED AND WHETH ER THE 15
INTEREST AND FEES WE RE IMPOSED BY THE OR IGINAL CREDITOR OR BY 16
SUBSEQUENT OWNERS OF THE PRIVATE EDUCATIO N LOAN; 17
(VI) A RECORD OF THE DATE T HAT THE PRIVATE EDUC ATION 18
LOAN WAS INCURRED ; 19
(VII) A RECORD OF THE DATE O F THE FIRST PARTIAL PAYMENT 20
OR THE DATE THAT A P AYMENT WAS FIRST MIS SED, WHICHEVER I S EARLIER; 21
(VIII) A RECORD OF THE DATE A ND AMOUNT OF THE LAS T 22
PAYMENT, IF APPLICABLE; 23
(IX) ANY PAYMENTS , SETTLEMENT , OR FINANCIAL 24
REMUNERATION OF ANY KIND PAID TO THE CRE DITOR BY A GUARANTOR , COSIGNER, 25
OR SURETY, AND THE AMOUNT OF TH E PAYMENT RECEI VED; 26
(X) A COPY OF THE SELF –CERTIFICATION FORM A ND ANY 27
OTHER NEEDS ANALYSIS CONDUCTED BY THE ORI GINAL CREDITOR BEFOR E THE 28
ORIGINATION OF THE L OAN, REDACTED TO WITHHOLD THE STUDENT LOAN 29
BORROWER ’S SOCIAL SECURITY NUMBER , ALL BUT THE LAST FOU R DIGITS OF THE 30
STUDENT LOAN BORROWE R’S ACCOUNT NUMBER , AND ANY OTHER PERSON AL 31
IDENTIFYING INFORMAT ION; 32
6 SENATE BILL 732
(XI) IF APPLICABLE, THE NAMES OF ALL PER SONS THAT OWNED 1
THE PRIVATE EDUCATIO N LOAN AFTER THE TIM E OF DEFAULT AND THE DATE OF 2
EACH SALE OR TRANSFE R OF THE LOAN; 3
(XII) A RECORD OF ALL COLLEC TION ATTEMPTS MADE I N THE 4
IMMEDIATELY PRECEDIN G 12 MONTHS, INCLUDING THE DATE A ND TIME OF ALL 5
COMMUNICATIONS , IF APPLICABLE; 6
(XIII) A STATEMENT BY THE CRE DITOR INDICATING WHE THER 7
THE CREDITOR IS WILL ING TO RENEGOTIATE T HE TERMS OF THE DEBT ; 8
(XIV) 1. COPIES OF ALL SETTLEM ENT COMMUNICATIONS 9
MADE IN THE IMMEDIAT ELY PRECEDING 12 MONTHS, REDACTED TO WITHHOLD THE 10
STUDENT LOAN BORROWE R’S SOCIAL SECURITY NUMBER , ALL BUT THE LAST FOU R 11
DIGITS OF THE STUDEN T LOAN BORROWER ’S ACCOUNT NUMBER , AND ANY OTHER 12
PERSONAL IDENTIFYING INFORMATION ; OR 13
2. A STATEMENT THAT THE C REDITOR HAS NOT 14
ATTEMPTED TO SETTLE OR OTHERWISE RENEGOT IATE THE DEBT BEFORE FILING 15
THE PRIVATE EDUCATIO N LOAN COLLECTION AC TION; 16
(XV) 1. DOCUMENTATION ESTABLISHING THAT TH E 17
CREDITOR IS THE OWNE R OF THE SPECIFIC IN DIVIDUAL PRIVATE EDU CATION LOAN 18
AT ISSUE; AND 19
2. IF THE PRIVATE EDUCAT ION LOAN WAS ASSIGNE D 20
MORE THAN ONCE , A RECORD OF EACH ASS IGNMENT OR OTHER WRI TING, NOT 21
INCLUDING A WRITING PREPARED IN ANTICIPATION OF LITI GATION, INDICATING 22
THE TRANSFER OF OWNE RSHIP OF THE INDIVID UAL PRIVATE EDUCATIO N LOAN 23
BEGINNING WITH THE O RIGINAL CREDITOR AND ENDING WITH THE MOST RECENT 24
ADDITIONAL CREDITOR , INCLUDING: 25
A. THE ORIGINAL CREDITOR ’S ACCOUNT NUMBER , 26
REDACTED TO SHOW ONL Y THE LAST FOUR DIGI TS, FOR THE PRIVATE EDUC ATION 27
LOAN PURCHASED OR OT HERWISE ASSIGNED ; 28
B. THE DATE OF PURCHASE AND ASSIGNMENT ; AND 29
C. THE STUDENT LOAN BORR OWER’S CORRECT NAME 30
ASSOCIATED WITH THE ORIGINAL ACCOUNT NUM BER; 31
(XVI) 1. A COPY OF ALL PAGES OF THE CONTRACT , 32
APPLICATION, OR OTHER DOCUMENT EV IDENCING THE STUDENT LOAN 33
BORROWER ’S LIABILITY FOR THE PRIVATE EDUCATION LO AN THAT: 34 SENATE BILL 732 7
A. STATES ALL TERMS AND CONDIT IONS APPLICABLE TO 1
THE PRIVATE EDUCATIO N LOAN; AND 2
B. IS REDACTED TO WITHHO LD THE STUDENT LOAN 3
BORROWER ’S SOCIAL SECURITY NUMBER , ALL BUT THE LAST FOU R DIGITS OF THE 4
STUDENT LOAN BORROWE R’S ACCOUNT NUMBER , AND ANY OTHER PERSON AL 5
IDENTIFYING INFORMAT ION; OR 6
2. IF A SIGNED CONTRACT , APPLICATION, OR OTHER 7
DOCUMENT EVIDENCING T HE STUDENT LOAN BORR OWER’S LIABILITY DOES NOT 8
EXIST, A COPY OF A DOCUMENT PROVIDED TO THE STUD ENT LOAN BORROWER 9
BEFORE THE DEFAULT D EMONSTRATING THAT TH E PRIVATE EDUCATION LOAN WAS 10
INCURRED BY THE STUD ENT LOAN BORROWER THAT: 11
A. INCLUDES ALL TERMS AND CONDIT IONS APPLICABLE 12
TO THE PRIVATE EDUCA TION LOAN; AND 13
B. IS REDACTED TO WITHHO LD THE STUDENT LOAN 14
BORROWER ’S SOCIAL SECURITY NUMBER , ALL BUT THE LAST FOU R DIGITS OF THE 15
STUDENT LOAN BORROWE R’S ACCOUNT NUMBER , AND ANY OTHER PERSONAL 16
IDENTIFYING INFORMAT ION; 17
(XVII) AN AFFIDAVIT STATING THAT A REPRESENTATIV E OF THE 18
CREDITOR: 19
1. PERSONALLY REVIEWED T HE EVIDENCE SUBMITTE D 20
TO THE COURT IN ACCO RDANCE WITH THIS SUB SECTION FOR FACTUAL ACCURACY; 21
AND 22
2. CONFIRMED THE FACT UAL ACCURACY OF : 23
A. THE ALLEGATIONS SET F ORTH IN THE COMPLAIN T; 24
B. ANY SUPPORTING AFFIDA VITS OR AFFIRMATIONS 25
FILED WITH THE COURT ; AND 26
C. ANY NOTARIZATIONS CON TAINED IN THE 27
SUPPORTING DOCUMENTS FILED TO THE COURT ; 28
(XVIII) AN AFFIDAVIT STATING COMPLIANCE W ITH § 5–1303 29
OF THIS SUBTITLE; 30
(XIX) A STATEMENT AS TO WHET HER A DEBT IS ELIGIB LE FOR AN 31 8 SENATE BILL 732
INCOME–BASED REPAYMENT PLAN ; 1
(XX) A STATEMENT AS TO WHET HER THE DEBT IS ABLE TO BE 2
DISCHARGED IN BANKRU PTCY; AND 3
(XXI) AN AFFIDAVIT STATING: 4
1. THE DATE ON WHICH THE PRIVATE EDUCATION 5
LENDER OR PRIVATE ED UCATION LOAN COLLECT OR HAS A GOOD FAITH BELIEF 6
THAT THE APPLICABLE STATUTE OF LIMITATIO NS WILL EXPIRE; AND 7
2. THAT THE PRIVATE EDUCATIO N LENDER OR PRIVATE 8
EDUCATION LOAN COLLE CTOR HAS NOT INITIATE D THE PRIVATE EDUCAT ION LOAN 9
COLLECTION ACTION AF TER THE APPLICABLE S TATUTE OF LIMITATION S HAS 10
EXPIRED. 11
5–1303. 12
(A) A PRIVATE EDUCATION LO AN COLLECTOR SHALL P ROVIDE THE 13
INFORMATION DESCRIBE D UNDER § 5–1302(B)(3)(I) THROUGH (XXI) OF THIS 14
SUBTITLE IN THE FIRS T COLLECTION COMMUNI CATION WITH THE STUD ENT LOAN 15
BORROWER AND ON REQU EST OF THE STUDENT L OAN BORROWER . 16
(B) FAILURE TO PRODUCE TO A STUDENT LOAN BORRO WER, ON REQUEST 17
OF THE STUDENT LOAN BORROWER , THE DOCUMENTATION DE SCRIBED IN 18
SUBSECTION (A) OF THIS SECTION IS A N UNFAIR, ABUSIVE, OR DECEPTIVE TRADE 19
PRACTICE UNDER § 13–301 OF THE COMMERCIAL LAW ARTICLE. 20
5–1304. 21
(A) A PERSON THAT SUFFERS DAMAGE AS A RESULT O F THE FAILURE OF A 22
CREDITOR TO COMPLY W ITH § 5–1302(B)(3) OF THIS SUBTITLE MAY BRING AN 23
ACTION AGAINST THE C REDITOR TO RECOVER O R OBTAIN THE FOLLOWI NG: 24
(1) AN ORDER VACATING ANY DEFAULT JUDGMENT ENT ERED 25
AGAINST THE PERSON ; 26
(2) A JUDGMENT IN FAVOR OF THE PERSON; 27
(3) ACTUAL DAMAGES IN AN AMOUNT NOT LESS THAN $500 PER 28
PERSON, PER VIOLATION; 29
(4) RESTITUTION OF ALL MO NEY TAKEN FROM OR PA ID BY THE 30
PERSON AFTER A JUDGM ENT WAS OBTAINED BY A CREDITOR; 31 SENATE BILL 732 9
(5) PUNITIVE DAMAGES ; 1
(6) ATTORNEY’S FEES; 2
(7) CORRECTION OF THE PER SON’S CREDIT REPORT ; AND 3
(8) ANY OTHER RELI EF THAT THE COURT CO NSIDERS PROPER . 4
(B) IN ADDITION TO ANY JU DGMENT UNDER SUBSECT ION (A) OF THIS 5
SECTION, IF A CREDITOR OR COU NSEL REPRESENTING A CREDITOR WILLFULLY 6
FILED AN AFFIDAVIT R EQUIRED UNDER THIS T ITLE CONTAINING FALS E 7
INFORMATION , THE COURT MAY AWARD TREBLE ACTUAL DAMAGES TO THE PERSO N 8
IN AN AMOUNT NOT LES S THAN $1,500 PER PERSON FOR EACH VIOLATION. 9
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 10
October 1, 2022. 11