Maryland Demand Letter

Introduction

Key Things to Know

1. 1

   Maryland does not require a demand letter before you sue under its Consumer Protection Act, but if your claim involves a dishonored check, Commercial Law Section 15-802 requires a separate written notice of dishonor, mailed at least 30 days before suit and only after the check has gone unpaid for 10 days, before you can recover the check amount, a collection fee of up to $35, and up to two times the check amount, capped at $1,000.

2. 2

   State your demand in specific numbers. Name the exact amount owed, the contract, invoice, or dishonored check it comes from, and a firm deadline to pay or act.

3. 3

   Maryland's Consumer Debt Collection Act, Commercial Law Section 14-201, covers any 'Collector' collecting a debt arising from a consumer transaction, including the original creditor itself, not only a professional collection agency, so when the debt arises from a personal, family, or household transaction, its no-threats and no-false-claims rules govern this letter; the Act does not reach ordinary business-to-business debt.

4. 4

   Maryland's District Court Small Claims division hears claims of $5,000 or less, exclusive of interest, costs, and attorney's fees if fees are recoverable by law or contract, under Courts and Judicial Proceedings Section 4-405, and Maryland allows an attorney to appear in small claims.

5. 5

   Mind Maryland's statute of limitations: three years to sue on a written contract, an oral contract, or an open account under Courts and Judicial Proceedings Section 5-101, though a contract for the sale of goods gets four years under Commercial Law Section 2-725.

6. 6

   Maryland's legal rate of interest is 6 percent per annum under Article III, Section 57 of the Maryland Constitution, unless the General Assembly provides otherwise. A money judgment generally carries 10 percent per annum under Courts and Judicial Proceedings Section 11-107(a), but a judgment on a loan of money keeps its contract rate until the loan's original maturity under Section 11-106, and a residential-rent judgment carries 6 percent under Section 11-107(b).

7. 7

   Keep the tone firm and factual, not threatening. Do not threaten arrest, jail, or criminal prosecution to collect a civil debt; Maryland's Consumer Debt Collection Act separately bars a collector, including an original creditor, from threatening criminal prosecution unless the transaction involved a criminal violation, under Commercial Law Section 14-202(2).

Maryland Requirements for Demand Letter

• Bad-Check Demand Unlocks Double Damages

  Maryland Commercial Law Section 15-802(b) lets a holder recover the amount of a dishonored check, a collection fee of up to $35, and an amount up to two times the check's value but not more than $1,000, once the check has gone unpaid for 30 days after a written notice of dishonor is mailed.

• Notice of Dishonor Timing and Statutory Form

  Section 15-802(a) bars sending the notice of dishonor until the check has gone unpaid for at least 10 days after dishonor, and Section 15-803(a) prescribes the notice's own required form, so a general demand letter does not substitute for it. The holder must also obtain a mailing certificate or affidavit of mailing under Section 15-802(c)(1)(ii).

• Full Payment Within 30 Days Is a Complete Defense

  Section 15-802(e) gives the maker a complete defense if the check amount plus up to $35 in collection costs is paid within 30 days of the notice being mailed, or if the dishonor resulted from a justified stop-payment order or account attachment.

• No MCPA Pre-Suit Notice Requirement

  Maryland's Consumer Protection Act lets any person injured by a prohibited practice sue directly under Commercial Law Section 13-408(a), with no pre-suit demand, notice, or content requirement before filing, though if a suit is brought in bad faith or is frivolous, the court may at any time order the offending party to pay the other party's reasonable attorney's fees under Section 13-408(c).

• Consumer Debt Collection Act Covers Original Creditors

  Maryland's Consumer Debt Collection Act defines a covered 'Collector' as any person collecting a debt arising from a consumer transaction, Commercial Law Section 14-201(b), with no exemption for the original creditor, so its prohibitions on threats, false claims, and harassment in Section 14-202 apply to a business demanding payment from its own customer.

• Criminal-Prosecution Threats Barred Unless Debt Involved a Crime

  Commercial Law Section 14-202(2) bars a collector, including an original creditor, from threatening criminal prosecution unless the underlying transaction involved a violation of a criminal statute.

• Small Claims Limit and Attorneys Permitted

  The District Court of Maryland's Small Claims division hears claims of $5,000 or less, exclusive of interest, costs, and attorney's fees if fees are recoverable by law or contract, under Courts and Judicial Proceedings Section 4-405, and Maryland allows an attorney to appear in small claims.

• Statute of Limitations by Claim Type

  Maryland gives three years to sue on a written contract, an oral contract, or an open account under Courts and Judicial Proceedings Section 5-101, but a contract for the sale of goods gets four years under Commercial Law Section 2-725(1).

• Legal and Judgment Interest Rates

  Maryland's legal rate of interest is 6 percent per annum under Article III, Section 57 of the Maryland Constitution. A money judgment generally carries 10 percent per annum under Courts and Judicial Proceedings Section 11-107(a), but a loan-of-money judgment keeps its contract rate until original maturity under Section 11-106, and a residential-rent judgment carries 6 percent under Section 11-107(b).