Which place’s debt rules apply—and who can help?

S_MD PASS-03 — Maryland consumer agreements and client-money duties

Research date/current-source check: October 24, 2026, Pacific. Scope: Maryland agreement formation/content, cancellation/termination, consumer-funds custody/control, accounting, records, and directly dependent classification issues. This does not reopen PASS-01 licensing/fee ceilings or adopt PASS-02's unresolved fee-trigger/per-debt conclusions as verified law.

A. Substantive findings

1. Agreement duties differ materially between DMP and debt settlement

Maryland uses two substantially different contract structures.

A covered debt-management-services (“DMP”) arrangement is inherently a funds-receipt/distribution model: the statutory definition is receiving funds periodically from a consumer under an agreement for distribution among creditors. The “debt management services agreement” itself is statutorily a written contract, plan, or agreement. Maryland reaches Maryland consumers even when the provider has no Maryland office. Maryland General Assembly+1

A covered debt-settlement-services (“DSS”) arrangement instead turns on representing that the provider will renegotiate, settle, reduce, or otherwise alter terms of unsecured consumer debt. The consumer must reside in Maryland, the DSS agreement is statutorily written, nonprofit status does not itself remove coverage, and the statute expressly covers telephone, Internet, face-to-face, intrastate, and interstate provision. Maryland General Assembly

That distinction matters for money custody. A settlement provider can operate without receiving the consumer's creditor-payment money. If it periodically receives funds in connection with settlement, the specific §12-1002(b) exclusion from DMP treatment applies only if all its stated conditions are met, including compliance with Subtitle 10, principal-reduction negotiations, no more than six settlement payments per debt, and a qualifying separate dedicated account. If those conditions fail, the “settlement” label does not itself prevent DMP analysis. [S_MD-P3-C001–C004] Maryland General Assembly

DMP pre-agreement and execution requirements

Before providing DMP services, the licensee must:

• provide a consumer-education program;
• provide a written summary of counseling options/strategies;
• obtain a signed consumer acknowledgment that the summary was reviewed and the consumer elected to proceed;
• have a certified counselor prepare a financial analysis and initial budget;
• provide copies of both to the consumer;
• identify, for all creditors identified by the consumer, which creditors the provider reasonably expects to participate and which it expects not to participate;
• execute a DMP agreement describing the services;
• have a reasonable, experience-based expectation that each creditor listed as participating will accept payments under the plan;
• determine that the DMP is suitable and that the consumer can meet the payment obligations; and
• provide the consumer a copy of the completed agreement. [C005–C007] Maryland General Assembly+1

There is also a separate written bankruptcy-related notice before DMP services begin. It tells the consumer about federal pre-bankruptcy counseling, whether the provider has U.S. Trustee Program approval, and where to obtain an approved-agency list. This is a Maryland-required disclosure referencing federal law; it is not a substitute for independent federal compliance analysis. Maryland General Assembly

DMP mandatory agreement contents

The DMP agreement must be signed and dated by both parties and the required content must appear in at least 12-point type. It must include, among other things:

• consumer and provider identity/contact information and the provider's license number;
• description of services and consumer charges;
• surety-bond disclosure;
• name/address of the financial institution holding consumer creditor-payment funds;
• notice that either party may rescind at any time by written notice;
• the consumer-to-provider payment schedule, including each payment's amount/due date;
• an itemization showing the provider-retained maintenance charge and the amount of each payment going to creditors;
• participating creditors, amounts owed, and the provider-to-creditor amount/date schedule;
• creditors reasonably expected not to participate;
• disclosure that the provider may receive creditor compensation;
• disclosures against conditioning enrollment on paid counseling/education/materials or requiring a “voluntary” contribution;
• authorization allowing the trust-account institution to provide relevant records to the Commissioner;
• credit-rating/score impact disclosure; and
• the prescribed Commissioner complaint/read-before-signing/copy notice. [C008–C010] Maryland General Assembly+2

The statute does not merely require an abstract “payment plan”: it requires both sides of the money schedule—what the consumer pays the provider and what the provider pays each participating creditor.

Section 12-918(g) separately requires a pre-service list identifying which services are free if the consumer enters a DMP, which cost money if no DMP is entered, and which separately charged services are outside the DMP. The provider may not make paid counseling, education, or materials a condition of entering the DMP. This is agreement-adjacent disclosure, not a substitute for the §12-916 agreement. [C011] Maryland General Assembly

DSS agreement requirements

A DSS agreement likewise must be signed and dated by the registrant and consumer and use at least 12-point type. It must state:

• consumer and registrant identity/contact information;
• services to be provided;
• DSS fees plus the statutory statements concerning prohibited consultation/credit-report fees and required “voluntary” contributions;
• each creditor/debt collector and the principal amount owed to each;
• total principal included in the program;
• a good-faith estimate of time necessary to obtain the represented results;
• when settlement offers are contemplated, a good-faith estimate for each creditor/debt collector of when a bona fide offer will be made and how much money or what percentage of the debt the consumer must accumulate before the offer;
• the unrestricted withdrawal right and no-penalty/earned-fee rule;
• the applicable statutory student-loan disclosure, where relevant;
• if a dedicated account is required/requested, disclosure that the consumer owns the funds and interest and of the statutory withdrawal-return obligation; and
• the possible tax consequence of debt reduction. [C012–C014] Maryland General Assembly+2

The statutory disclosures in §12-1012(a)(2)(vii) through (xii)—including timing, accumulation, withdrawal, dedicated-account, and tax disclosures—must be provided clearly and conspicuously. Maryland General Assembly

Important delivery difference: unlike DMP §12-916(a)(1)(vi), the DSS provisions freshly read in this pass do not expressly say that a completed copy of the executed DSS agreement must be delivered to the consumer. Because the agreement must be written, signed, dated, and contain prescribed consumer disclosures, other Maryland electronic-record or general contract law may affect delivery/use, but I did not find a Subtitle 10 clause equivalent to the DMP completed-copy mandate. That absence is not converted into permission to withhold the agreement. [C015]

Electronic agreement and delivery rules

Maryland's UETA provides that electronic records/signatures cannot be denied effect solely because they are electronic; an electronic record can satisfy a writing requirement and an electronic signature can satisfy a signature requirement. But UETA applies to an electronic transaction only when each party has agreed to transact electronically. In an ordinary standard-form contract, an electronic-transactions clause generally must be conspicuous and separately consented to unless contained in a separate optional electronic agreement. Maryland General Assembly+1

Where another law requires written information to be provided, sent, or delivered, the electronic record must be capable of retention by the recipient at receipt. A sender that inhibits printing/storage cannot enforce that electronic record against the recipient; another statute's specified delivery method or format remains controlling. Maryland General Assembly

DMP §12-916 goes further for the financial-analysis/budget materials: Internet delivery is expressly permitted only if a counselor has reviewed/approved the program/application and the consumer is told counseling is available and given an opportunity to discuss the analysis/budget; Title 21 expressly applies to those transactions. [C016–C018] Maryland General Assembly

I found no Maryland DSS provision requiring paper-only execution. That does not eliminate UETA consent/retention requirements or any independently applicable federal consumer-electronic-disclosure requirements.

Genuine exclusions relevant to contract application

No generic “nonprofit” exception exists for these duties. DSS expressly defines the provider to include for-profit and nonprofit providers. Maryland General Assembly

For DMP, §12-902 contains activity-specific exclusions for attorneys, escrow agents, CPAs, specified financial institutions, qualifying bill payers, accelerated-mortgage-payment providers, title entities, judicial/court-order actors, certain business-dissolution services, trade/mercantile associations in the stated circumstances, and a licensed mortgage lender that does not receive consumer funds for creditor distribution. Maryland General Assembly

DSS exclusions are separately framed. The attorney exclusion requires a lawyer admitted to the Maryland Bar while providing professional legal services in an attorney-client relationship; other exclusions are likewise activity/entity conditioned. A licensed collection agency is excluded only while engaged in the defined collection-agency business. Maryland General Assembly+1

These exceptions determine whether §§12-916/917 or §§12-1010/1012 apply; an attorney relationship or institutional label cannot be presumed from marketing.

2. Cancellation, termination, refunds, and legal time counting

DMP

There is no general fixed three-day or other Maryland cooling-off period in the DMP provisions read. Instead, §12-916 requires the agreement to state that either party may rescind at any time by giving written notice to the other party. [C019] Maryland General Assembly

There is a special creditor-nonparticipation protection. If a creditor listed as participating declines to participate, the provider must notify the consumer by certified mail or another verifiable means approved by the consumer, at least five business days before the next scheduled consumer payment. The notice must identify the creditor and state the consumer's right to modify or rescind. A consumer rescinding under that subsection is entitled to return of all unexpended funds paid to the licensee for reduction of debt. Maryland General Assembly+1

That is narrower than saying “all fees must be refunded.” The statute distinguishes creditor-reduction funds from fees. Section 12-918(e) separately prohibits a rescission fee, and §12-918(j) requires return of unauthorized amounts and voids the agreement for non-bona-fide-error unauthorized receipts. PASS-01 fee conclusions are not re-adjudicated here. [C020–C022] Maryland General Assembly

On any DMP cancellation or termination, the provider must issue the consumer the statutory written accounting showing funds received for creditor payment since the previous report and amounts/dates disbursed to each creditor. That accounting is otherwise due at least once per calendar quarter. [C023] Maryland General Assembly

I found no general Subtitle 9 clause in the freshly read provisions specifying a number of days after ordinary written rescission within which all remaining trust funds must be returned. The special nonparticipating-creditor refund is clear as to entitlement, but §12-918(h)(4) itself does not state a separate refund deadline. Exact ordinary-termination remittance timing therefore remains a focused hold unless another governing funds/trust provision supplies it. [C024]

DSS

Maryland gives the consumer the right to withdraw from the DSS agreement at any time. The registrant may not impose a withdrawal penalty; it may collect only DSS fees “earned” in compliance with §12-1010. Maryland General Assembly

Where the program uses the statutory dedicated account, consumer withdrawal triggers a separate funds-return rule: within seven days after the consumer's request, all funds in the account, including accrued interest, must be paid to the consumer less only DSS fees earned in compliance with §12-1010. The DSS agreement must disclose this rule. Maryland General Assembly+1

The statute says “requests to withdraw”; unlike the DMP general rescission clause, it does not say the DSS request must be written. I found no Subtitle 10 provision in this pass authorizing the contract to transform that statutory right into a written-notice-only right. [C025–C027]

There is likewise no separate cooling-off waiting period in the DSS provisions read: the consumer can withdraw at any time.

Seven-day counting rule

For a period “described in a statute,” Maryland General Provisions §1-302 says:

1. exclude the day of the triggering act/event;
2. ordinarily include the final day;
3. if the final day is Sunday or a legal holiday, extend to the next day that is neither; and
4. for a period of seven days or less, intermediate Sundays and legal holidays are not counted. Maryland General Assembly

Therefore §12-1010(d)(5)'s “within 7 days after the consumer's request” should not casually be converted to seven ordinary consecutive calendar days. Saturdays are not excluded by §1-302 merely because they are Saturdays; Sundays and Maryland legal holidays are excluded for this seven-day statutory period. [C028]

I do not assign a real-calendar endpoint without the withdrawal date and applicable Maryland holiday facts.

PASS-02 earning/refund hold expressly preserved

PASS-03 does not resolve what amount is “earned” where a settlement involves installments, an incomplete later debt, a failed installment arrangement, or the unresolved Maryland-only §12-1010(c)(3) payment trigger. Section 12-1010(d)(5)/(f) gives the refund formula conceptually, but the earned-fee input may still be legally unresolved under PASS-02. An earlier debt triggering some fee entitlement cannot silently establish entitlement to fees allocated to every later debt. [C029]

Federal TSR requirements may independently be stricter in covered transactions, but they are not used here to rewrite Maryland's statutory wording.

3. Client-money custody, control, segregation, disbursement, statements, and records

DMP: provider receives money, but creditor funds become trust money

A DMP under §12-901(h) is based on periodic consumer funds received for creditor distribution. Maryland defines the required “trust account” as an account:

• at a federally insured financial institution;
• separate from the provider's operating account;
• designated as a trust or equivalently designated so the funds are identified as not provider/officer/employee/agent funds;
• unavailable to the provider's creditors; and
• used to hold consumer funds for disbursement to consumers' creditors. [C030] Maryland General Assembly+1

Section 12-917 then imposes operational timing and segregation duties:

• deposit consumer creditor-payment funds in the trust account within two business days after receipt;
• maintain separate account records for each consumer;
• disburse consumer funds to creditors within eight business days after receipt;
• correct misdirected payments caused by provider error;
• reimburse the consumer for actual creditor fees/charges caused by that misdirection; and
• never commingle the consumer-benefit trust account with provider operating accounts. [C031–C033] Maryland General Assembly

The agreement itself must identify the financial institution that will hold the creditor funds, itemize provider-retained amounts versus creditor-directed money, identify participating creditors, and specify creditor disbursement amounts/dates. Maryland General Assembly

Third-party trust-account management

The licensing application must identify an agent acting for the provider to manage the §12-917 trust account, and the provider cannot simply change the person controlling/managing that account without the Commissioner-related approval mechanism described in §12-915. The presence of a third-party agent therefore does not eliminate the statutory DMP trust obligations. The provider remains subject to the consumer-specific accounting/record regime. [C034]

This pass does not reopen the bond/insurance conditions.

DMP statements and reconciliation

Consumers must receive a written accounting at least once each calendar quarter and again upon cancellation/termination. It must state creditor-payment funds received since the previous report and the amount/date of each creditor disbursement. Maryland General Assembly

Separately, DMP licensees must preserve for at least seven years:

• general ledger;
• each DMP agreement;
• books/records for each consumer;
• bank statements and bank reconciliation records;
• each required counseling-options summary; and
• each signed acknowledgment. Maryland General Assembly+1

Records may be stored elsewhere if the Commissioner is notified and they can be made available in Maryland within seven days after a written examination request. They may be kept in original or Commissioner-approved photographic/electronic/similar form. Consumer records are confidential except for the specified persons, and these record obligations extend to relevant records held by a subsidiary, affiliate, or other person concerning the DMP business. [C035–C037] Maryland General Assembly

Thus outsourcing custody/account administration does not erase Maryland record accountability.

Remote-work restriction relevant to custody

Current COMAR 09.03.02.08 expressly includes DMP licenses within its definition of covered “license.” A qualifying employee may work remotely, but the remote location may not receive or dispense cash, negotiable instruments, or other monetary value in the licensed business, and generally may not be used to store business records except under the specified secure-transmission/storage exceptions. Maryland Regulations+1

The Commissioner adopted permanent Regulation .08 on March 22, 2021, effective April 19, 2021. The actual Maryland Register final-action page states it was adopted as proposed. Maryland State Archives

This COMAR remote-work provision enumerates DMP licensure under Subtitle 9; it does not list a Subtitle 10 DSS registration. I therefore do not extend this specific remote-location cash prohibition to DSS registrants without additional authority.

DSS: consumer-owned dedicated account, independent administrator

A DSS provider is not inherently custodial in the DMP sense. The statutory dedicated-account option allows the registrant to request/require funds to be deposited for DSS fees and creditor/debt-collector payments only if:

• the funds are held at an insured financial institution;
• the consumer owns the funds and accrued interest;
• the institution/entity administering the account is not owned/controlled by or affiliated with the registrant;
• the administrator does not pay or accept referral compensation involving the registrant, although it may charge account-related fees; and
• upon a qualifying withdrawal request, the account balance and accrued interest, less legally earned compliant DSS fees, go back to the consumer within the statutory period. [C038–C040] Maryland General Assembly+1

This is fundamentally different from DMP trust custody:

The historical OFR DSS advisory repeats the statutory independent-account/consumer-ownership/withdrawal framework and is consistent with §12-1010, but it is a September 22, 2011 historical agency advisory, not a later formal interpretation creating additional custody duties. [C041] MD Labor

The absence of a parallel Subtitle 10 disbursement/reconciliation clause in the sources read is not a finding that no other Maryland law, account agreement, financial-institution law, fiduciary rule, or independently applicable federal requirement can impose one. That broader question remains open.

Classification control remains critical

A company cannot choose the more convenient account regime by calling itself “settlement.” If it periodically receives consumer funds and fails §12-1002(b)'s settlement carveout, Subtitle 9/DMP classification has to be reexamined. Conversely, a true noncustodial settlement model should not be mechanically subjected to §12-917 simply because money is being accumulated by the consumer elsewhere. [C003–C004, C042] Maryland General Assembly

B. PASS-03 source table

All sources below were actually accessed/read on October 24, 2026 Pacific, unless expressly labeled historical. The “Direct source” links are the official public routes used.

Currentness reconciliation

The operative statutory passages above are the official 2026 Maryland texts freshly read. The 2026 Financial Institutions “Statutes Affected” table shows §12-802 and then §12-1101 as the next affected Title 12 entries—none of the Subtitle 9/10 sections used in this pass appears in that interval. Maryland General Assembly

The MGA statutes interface also indicated statutes could be shown in effect as of October 1, 2026. Direct target-section requests using its “include enactments” parameter nevertheless failed in the public tool, so I do not represent those failed views as read. The substantive text plus 2026 affected-section check is the currentness chain used here.

COMAR .08 is not merely an old emergency rule: the actual 2021 final-action notice records permanent adoption and an April 19, 2021 effective date. Maryland State Archives

C. Material claim table

D. Bounded examples

These examples use only verified agreement/funds clauses. They do not invent a Maryland fee entitlement.

Example 1 — DMP creditor-money custody

Inputs

Consumer sends the licensed DMP provider $600, all expressly designated under the agreement for creditor payments. Assume the agreement is valid and no part of this $600 is provider compensation.

Base: $600 consumer creditor funds. Operator: §12-917(a)/(b). Intermediate: trust deposit = $600; creditor-disbursement pool = $600. Result: provider must place $600 into the qualifying trust account within 2 business days after receipt and disburse that money to creditors within 8 business days after receipt, following the creditor schedule. No rounding arises. Maryland General Assembly

No exact dates are assigned because “business day” depends on the actual receipt date and applicable nonbusiness days.

Example 2 — DMP misdirected payment

Inputs

Provider should send $400 to Creditor A and $200 to Creditor B but mistakenly sends the $200 payment to the wrong creditor. Creditor B imposes a documented $25 late charge because of the provider's error.

Operator: §12-917(b)(3).

Result: provider must correct the misdirected payment and reimburse the consumer the actual $25 creditor charge caused by the error. Refund arithmetic: $25 actual caused charge × 100% reimbursement = $25. No rounding. Maryland General Assembly

This is not an assumed consequential-damages rule; it is the specific statutory actual-fee/charge reimbursement duty.

Example 3 — DMP special rescission after creditor refusal

Inputs

Consumer has paid $800 specifically for debt reduction. Provider has already disbursed $500 to creditors. A creditor listed as participating later refuses, proper §12-918(h) notice is given, and the consumer rescinds under that subsection.

Base: $800 debt-reduction funds. Operator: unexpended funds = paid debt-reduction funds − already expended creditor funds. Intermediate: $800 − $500 = $300. Result: $300 must be refunded as unexpended debt-reduction funds under §12-918(h)(4). Maryland General Assembly

This does not assume that every earlier lawfully earned provider fee is separately refundable. No rescission fee may be imposed.

Example 4 — DSS withdrawal before any debt has been altered

Inputs

Consumer has $1,250 in the qualifying dedicated account, including accrued interest. The DSS agreement exists, but no individual debt has yet been renegotiated, settled, reduced, or otherwise altered. Consumer requests withdrawal. Assume no independent administrator charge is outstanding.

Legal dependency: §12-1010(c)(2) has not occurred, so the registrant has not satisfied the statutory predicates for charging a DSS fee under subsection (c). This example does not depend on the unresolved (c)(3) interpretation.

Operator: account funds + interest − legally earned DSS fees.

Intermediate: $1,250 − $0 = $1,250.

Result: $1,250 is the statutory account-return amount on these assumptions. The return period is governed by §12-1010(d)(5) and GP §1-302. Maryland General Assembly+2

No calendar date is fabricated.

Example 5 — Seven-day statutory counting without inventing a date

Inputs

Withdrawal request occurs on a hypothetical Monday. Assume no Maryland legal holiday occurs during the following period.

Counting rule first: exclude request day; because the period is seven days, do not count intermediate Sundays or legal holidays; Saturday is not excluded merely for being Saturday. Maryland General Assembly

Count: Tuesday=1; Wednesday=2; Thursday=3; Friday=4; Saturday=5; Sunday excluded; Monday=6; Tuesday=7.

Result: under those stated assumptions, the seventh counted day is the following Tuesday. If a Maryland legal holiday intervenes, the result changes.

Example 6 — DSS installment settlement: exact refund held

Inputs

Dedicated-account balance including interest = $2,400. A creditor has accepted a multi-installment settlement; some installments have been paid. Provider asserts $600 has been “earned.”

Known statutory operator: refund = account balance − DSS fees actually earned in compliance with §12-1010.

Unknown input: legally earned fee E, because PASS-02 did not resolve Maryland's installment/per-debt earning rule.

Result: refund = $2,400 − E. It is not permissible from the authority presently verified to substitute $600 for E merely because the provider asserts it.

No exact refund is stated. That is the required legal hold, not an arithmetic gap. [C029]

Example 7 — classification failure despite “settlement” label

Inputs

A provider calls its program “debt settlement,” periodically receives consumer funds, negotiates principal reduction, but plans eight provider-controlled settlement payments for one debt.

Operator: §12-1002(b)(2)(ii) allows the specific DMP carveout only if there are no more than six settlement payments per debt.

Intermediate: 8 > 6.

Result: the provider cannot rely on that particular §12-1002(b) exclusion from DMP treatment. Its custody structure must be reclassified before using the DSS-only dedicated-account assumptions. No fee or contract validity is invented from these facts. Maryland General Assembly

E. Component coverage and exact remaining investigations

Failed-route/dependency log

F. Researcher self-check

Actually freshly read for PASS-03

I freshly read the operative Maryland statutory passages governing:

• DMP definitions and trust-account definition;
• DMP exclusions and out-of-state-provider nexus;
• DMP pre-service education, counseling summary, signed acknowledgment, financial analysis/budget, creditor-participation lists, suitability/payment-ability determination, agreement execution and copy delivery;
• every material DMP agreement-content clause in §12-916(b);
• DMP trust deposit, separate consumer account records, creditor-disbursement timing, misdirection reimbursement and noncommingling;
• directly relevant §12-918 service-list/rescission/refund/unauthorized-receipt provisions;
• quarterly and cancellation accounting;
• seven-year DMP records, bank statements/reconciliations, confidentiality, and third-party-held records;
• DSS definitions, resident/interstate scope, settlement-vs-DMP money-flow carveout, and material exclusions;
• DSS dedicated-account ownership/administrator/referral/withdrawal rules;
• DSS agreement content and clear/conspicuous requirements;
• Maryland UETA consent, electronic-signature/writing and retainable-delivery provisions;
• Maryland statutory time-computation rule;
• current COMAR 09.03.02.08's DMP remote-work/money/records restrictions; and
• the actual Maryland Register Final Action [21-009-F], printed p.308, establishing permanent adoption/effective date. Maryland State Archives

Key PDF statutes were analyzed through their actual extracted text and page images where needed; the COMAR final-action PDF was visually inspected.

Historical/agency material

The September 22, 2011 OFR DSS advisory was treated as historical agency guidance, not as current statutory text or a formal adjudicatory interpretation. MD Labor

No enforcement allegation, search snippet, historical form, or proposal was used to create an operative contract/funds obligation.

Not established in this pass

I do not claim to have established:

• the unresolved PASS-02 Maryland-only §12-1010(c)(3) payment construction;
• installment/per-debt DSS fee earning or failed-installment refund law;
• a general ordinary-DMP residual-trust-fund return deadline;
• a Subtitle 10-equivalent quarterly statement/reconciliation/retention regime where none was located;
• every potentially applicable general contract, fiduciary, money-transmission, banking, privacy, or federal electronic-consent rule;
• a full later-history/citator review of every Maryland case touching these statutes;
• authorization of any named provider;
• state completion, A066 acceptance, publication readiness, independent review, or any local saved artifact.

The user-supplied PASS-01/PASS-02 review provenance was not represented as a file I could inspect. PASS-02 remains not fully coordinator-reviewed, and its specified holds remain holds.

No Deep Research, Work, Codex, other chats, Chrome-permission changes, account changes, purchases, contacts, filings, private borrower data, website changes, or publication were used.

END S_MD PASS-03