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District Court dismisses debt cases against Marylanders

Maryland's District Court has tossed out nearly 3,600 debt-collection cases against state residents — with about $7.8 million in claims — as a result of a settlement with regulators over alleged violations.

District Court Chief Judge Ben C. Clyburn said in a statement Wednesday that the cases, brought by sister companies LVNV and Resurgent Capital Services, are eligible to be filed again later because they were dismissed without prejudice.

LVNV buys consumer debts while Resurgent tries to collect. Both are owned by the Sherman Financial Group.

Such debt-buyer suits have clogged small-claims courts, Clyburn said. Last fall the state's highest court stiffened the requirements for such cases after complaints about a flood of suits filed with little or no evidence.

To settle allegations that they violated state and federal law, LVNV and Resurgent agreed to drop cases, pay a $1 million penalty to the state and issue more than $3.8 million in credits to consumers, the state Department of Labor, Licensing and Regulation said last week. The agency had alleged that the companies weren't licensed as debt collectors, made inaccurate claims about amounts owed and employed attorneys who filed "false or misleading" documents in lawsuits.

LVNV and Resurgent "expressly deny any liability and wrongdoing," the state labor department said.

"We are pleased that we have been able to reach such a positive and amicable resolution of all outstanding issues," said Tom Thurmond, executive vice president of Resurgent, in a statement.

The District Court will mail notices to residents whose cases were dismissed or who are due a credit. The state labor department said more than 6,200 consumers — those with cases that were settled or resulted in a judgment against them — should receive credits without having to take any action.

jhopkins@baltsun.com

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