Business Debt Restructuring in Maryland: 7 Laws That Change Your Leverage (2026)

The funder suing on purchased receivables in Maryland courts may have no right to be there at all. A controlling appellate decision treats consumer debt buyers collecting through litigation as collection agencies requiring licenses, with judgments obtained while unlicensed exposed to collateral attack, and the same theory reaches MCA funders pursuing assigned receivables without licensure.

Seven authorities below compose the restructuring posture in this state, from the perfection test through usury to the licensure decision that experienced counsel raises before any other subject. A demand letter received in December reads the same in June, though the statute governing it does not observe seasons, and the owner who answers documentation with documentation changes the proceeding entirely.

Secured Transactions as the Threshold Test

The Maryland enactment of Uniform Commercial Code Secured Transactions governs attachment, perfection, priority, and enforcement of security interests in receivables and equipment. The citation comes first because everything else depends on it, since a perfected lien carries account debtor collection rights while an unsecured claim is settled at a discount reflecting actual exposure.

Counsel should ensure the filing, the security agreement, and any assignment chain are reviewed and analyzed together before figures are exchanged. You sign the guarantee and then you discover what the guarantee means, often in the week the first enforcement letter arrives.

Prohibited Practices Under the Consumer Protection Act

The Consumer Protection Act bars unfair, abusive, or deceptive trade practices in covered sales, leases, loans, and related transactions. The provision underpins deception claims and Division enforcement threats against funders, brokers, or collectors that misled a business principal.

Maryland courts routinely examine these state claims alongside federal collection claims arising from the same conduct.

Collection Conduct and the Licensing Gate

The Collection Agency Licensing Act requires a license for collection agency business in the state, a term reaching persons collecting for another or soliciting consumer claims, and a receivables buyer pursuing Maryland obligors must be tested for licensure before any payment discussion. Unlicensed collection supports enforcement referrals and arguments over the validity of what the collector obtained.

The Consumer Debt Collection Act separately forbids threats of force, threats of criminal prosecution where no crime taints the transaction, improper disclosure of alleged debts, and further enumerated abuses (which defenders of high pressure collection will insist are standard practice) that map directly onto routine MCA collector threats. Rarely does a collector explain the license requirement without prompting. That is the whole of Maryland collection law as the debtor experiences it: permission first, conduct second, and consequences where either is missing.

The Six Percent Legal Rate

Maryland sets the general legal rate at six percent simple interest absent other governing law. The low default ceiling frames every recharacterization argument, since a funder extracting triple digit equivalent rates must defend an exemption or the purchase characterization, a comparison between six percent and the funded rate that is extremely difficult for the funder to explain, and the funder bears the burden of proving any exemption claimed.

Arithmetic of this kind needs no advocate.

Exemptions From Execution

In 2023, the legislature amended the exemption schedule now codified at the section shielding household goods, trade tools to five thousand dollars, health aids, and further enumerated interests.

The trade tools allowance performs peculiar work, since it protects the instruments of livelihood while the remaining business liabilities are restructured, and counsel inventories exempt property and works to ensure settlement authority reflects only reachable assets.

Registration of Debt Settlement Services

Settlement intermediaries and MCA resolution shops operating in Maryland must be tested against the registration regime for debt settlement services, which requires registration, constrains fees and agreements, and compels annual reporting. The requirement applies to programs claiming to renegotiate or reduce consumer debts owed to unsecured creditors or collectors. An intermediary that cannot show registration has answered the first question about itself, though the reported enforcement figures under this regime are thinner than one would prefer, and counsel should say so, since overstatement would weaken the point, while the registration gap remains extremely useful where the intermediary cannot show registration.

Unlicensed Judgments Subject to Collateral Attack

In LVNV Funding v Finch, the Court of Appeals addressed judgments an unlicensed debt buyer had obtained in District Court, where the plaintiffs sought to have those judgments declared void while pursuing private damages for statutory violations (the opinion treats licensure as a condition of valid access to the courts, a standing requirement no unlicensed plaintiff satisfies after judgment). The decision stands as Maryland authority that purchasers collecting through litigation are collection agencies needing licenses.

Resist the urge to treat a filed judgment as the end of inquiry, even casually entered defaults merit review where the plaintiff collected without a license. The case against the owner weakens considerably once the collector must defend its own standing, and steps the owner takes, or does not take, within the challenge period determine whether that weakness can still be used.

Delancey Street is a business debt relief company based in New York, not a law firm, and it pursues negotiated resolution of MCA and business debts while independent counsel handles legal proceedings. A confidential first review examines the filings, the licenses, and the figures together, which is simply how these matters should be opened. Maryland rewards the party that questions authority first and pays second, if payment is owed at all.