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

The Statute Book Here Is Old, and Almost None of It Is On Your Side

Eleven states now require a funder to disclose the cost of a commercial advance before you sign it. Maryland is not one of them, and as of August 2026 no Maryland act imposes a disclosure duty, a registration duty or a rate ceiling on this product. A Baltimore contractor and a Bethesda staffing firm sign the same paperwork a Virginia company signs, forty miles down the road, and get none of the protections a Virginia company gets.

What Maryland has instead is an unusually old and unusually creditor-friendly body of law that most owners never encounter until a judgment already exists. Confessed judgments are entered here by a judge on the papers, with a notice rather than a summons arriving afterward. The fraudulent conveyance statute dates to 1918 and has no badge list and no limitations section of its own. The word seal, printed on a signature page nobody read, can turn a three-year deadline into a twelve-year one.

One genuine bright spot exists and it belongs to the guarantor rather than the company, which we cover at the end. Everything before that is a list of things a Maryland funder can do that its counterpart in Richmond or Hartford cannot, in the order a Maryland file runs into them. Here the leverage comes from the contract and from timing rather than from a statute you can point at.

1. No Disclosure Law, and What Sits in the Empty Space

Eleven jurisdictions have enacted commercial financing disclosure statutes, California, Connecticut, Florida, Georgia, Kansas, Louisiana, Missouri, New York, Texas, Utah and Virginia, and Maryland is not among them. The comparison sits on our disclosure law map. The practical consequence is simple: there is no Maryland finance charge disclosure to be missing, no registration to have lapsed, and no regulator with jurisdiction over the advance as such.

The provisions Maryland does have that touch this product are all written for consumers, and it is worth naming them so you do not waste time on them. Com. Law §12-311(b) bars a lender from taking a confession of judgment as security for a loan, but that subtitle governs consumer lending. Section 12-607(a)(2) does the same for retail installment sales. Section 13-301(12) makes it a prohibited practice to use a confessed judgment clause in a contract related to a consumer transaction. None of the three reaches a working capital advance to an operating business.

So a Maryland file is won or lost on the agreement and on the funder's performance under it, and the leading decision on that question came out of a Maryland bankruptcy court and went the funder's way. In Guttman v. EBF Holdings, decided in the Chapter 7 case of Global Energy Services (Bankr. D. Md. Mar. 31, 2025), the court treated a clause saying the funder shall adjust as mandatory language evidencing a true sale and dismissed the usury counts, partly because the trustee never alleged that the provision failed in practice or that the merchant ever asked for reconciliation. Fraudulent transfer, preference and turnover counts survived. Read it as an instruction about evidence.

2. The Judgment Arrives Before the Lawsuit Does

Maryland is one of the few states where a confessed judgment is still ordinary practice, and the mechanics under Md. Rule 2-611 catch people badly. The creditor files a complaint accompanied by the original or a copy of the written instrument authorizing confession for a liquidated amount, plus a sworn affidavit in the form the rule prescribes. That affidavit must state that the instrument does not arise from a consumer loan barred by Com. Law §12-311(b), a consumer transaction barred by §13-301, or a retail installment sale barred by §12-607. Nothing in the form asks about a commercial advance, because nothing prohibits one.

Subsection (b) directs the clerk to enter judgment if the court finds the complaint complies and the papers show a factual and legal basis for entitlement, and to dismiss otherwise. Then subsection (c): promptly upon entry, the clerk, instead of a summons, issues a notice informing you that judgment has been entered and telling you the latest date to move to open, modify or vacate it. Read that sequence again. The first document you receive is not a complaint you can answer. It is notice that you already lost.

The deadline runs through Rule 2-321: thirty days from service in Maryland, sixty if you were served elsewhere in the United States or through the State Department of Assessments and Taxation as resident agent, ninety if served abroad. District Court is a flat thirty under Rule 3-611(d). Rule 2-611(e) sets the standard, which is a substantial and sufficient basis for an actual controversy on the merits. Rule 2-611(f) gives you a little air: unless the court orders otherwise, property may not be sold and wages or other debt may not be remitted to the creditor until the motion time has run and any motion filed has been decided.

3. Above Fifteen Thousand Dollars, Any Rate Is Lawful

Maryland's baseline looks strict and is almost never operative. Com. Law §12-102 bars charging interest above an effective rate of simple interest of six percent a year on the unpaid principal balance of a loan except as otherwise provided by law. Section 12-103(a)(1) raises that to eight percent where a written agreement signed by the borrower states the rate, and §12-103(a)(3) permits eighteen percent on an unsecured loan, or twenty-four on a loan made on or after July 1, 1982 subject to five conditions.

Section 12-103(e)(1) then removes the ceiling entirely for the transactions this page is about. A lender may charge interest at any rate if the loan is made to a corporation, or is a commercial loan in excess of $15,000 not secured by residential real property, or a commercial loan in excess of $75,000 secured by residential real property. Section 12-101(c) defines a commercial loan as one made solely to acquire or carry on a business or commercial enterprise, or made to any business or commercial organization. Above fifteen thousand dollars into an operating business, Maryland sets no maximum.

Two details are worth carrying even so. Where a Maryland usury claim does exist, §12-114(b)(1) makes the violator forfeit the greater of three times the excess interest and charges collected or five hundred dollars, with a thirty-day cure at §12-114(b)(2). But §12-111(b) is brutal on timing, barring a private usury action more than six months after the loan is satisfied, and §12-112(b) blocks the claim against an assignee who took for bona fide and legal consideration without notice, which matters once your file has been sold.

4. Maryland Never Left the 1918 Fraudulent Conveyance Act

Com. Law §15-214 says the subtitle may be cited as the Maryland Uniform Fraudulent Conveyance Act, and Maryland means it. Most of the country moved to the Uniform Fraudulent Transfer Act in the 1980s and much of it has since moved again to the Uniform Voidable Transactions Act. Maryland stayed on the 1918 model, and the differences change how a restructuring gets tested here.

The central concept is fair consideration rather than reasonably equivalent value, and §15-203 builds good faith directly into it: fair consideration is given if property is conveyed or an antecedent debt satisfied as a fair equivalent and in good faith, or if property is received in good faith to secure an advance or antecedent debt in an amount not disproportionately small compared to what was obtained. Section 15-204 makes a conveyance without fair consideration by someone rendered insolvent fraudulent without regard to intent, with insolvency defined at §15-202(a) as fair market value of assets below the amount needed to pay probable liability on existing debts as they mature. Section 15-205 covers unreasonably small capital, §15-206 covers incurring debts beyond ability to pay, and §15-207 covers actual intent as distinguished from intent presumed in law.

Two structural gaps matter. The subtitle contains no list of badges of fraud, so there is no statutory checklist a Maryland court works through, and it contains no extinguishment or limitations section of its own, which means the period comes from elsewhere in the Code rather than from a four-year rule you can quote. And §15-209(b) is the provision that shortens everyone's timeline: in an action to set a conveyance aside, it is not necessary as a condition of relief that the creditor first obtain judgment on the claim. A Maryland funder can attack a transfer while it is still suing you. None of this is a method for moving assets, and we are not describing one; it is how counsel prices something already done.

5. The Twelve-Year Trap Hiding in One Word

Cts. & Jud. Proc. §5-101 is the rule everyone quotes: a civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period. Three years is short, and a Maryland business owner who has heard that number tends to assume an old advance is beyond reach.

Section 5-102 is the other provision. An action on a specialty must be filed within twelve years after the cause of action accrues, or within twelve years from the death of the last to die of the principal debtor or creditor, whichever is sooner. Specialties include a promissory note or other instrument under seal, a bond, a judgment, a contract under seal, and any other specialty. Subsection (b) adds that a payment of principal or interest suspends the section for three years from the payment date.

So the question on an old Maryland file is whether the paper you signed was executed under seal, and funding agreements frequently are, sometimes by nothing more than the word Seal printed beside the signature line. Twelve years instead of three is a four-fold difference in how long a funder can wait, and it changes what a settlement is worth today. Maryland judgments run on the same twelve-year rhythm: under Md. Rule 2-625 a money judgment expires twelve years from entry or most recent renewal, and the holder may file a notice of renewal at any time before expiration, at which point the clerk enters the judgment renewed. There is no limit on renewals in the rule.

6. Five Hundred Dollars Survives a Bank Levy Without You Asking

Md. Rule 2-645 governs garnishment of property other than wages, and property includes any debt owed to you whether payable now or unmatured. The writ issues from the clerk on request, and under Rule 2-645(c)(4) it must tell both you and the garnishee that exemptions may be available and that up to $500 in deposit accounts held by a depository institution is exempt without any election by the debtor. The garnishee answers within the Rule 2-321 period, and if you file nothing, the matters in that answer stand unless the creditor replies within thirty days.

Cts. & Jud. Proc. §11-504(b) supplies the numbers, and the automatic bank exemption at (b)(5) is unusual: the institution answers stating either that the total does not exceed $500 or the amount above $500 being held, and under (c)(3)(iv) it applies separately to each institution and each writ. Subsection (b)(1) exempts up to $5,000 in tools, books, instruments and appliances necessary for a trade or profession, (b)(4) exempts $1,000 in household goods, and (b)(6) gives a $6,000 wildcard if you elect it within thirty days of the attachment, with the wildcard and the bank exemption together capped at $6,000. Subsection (d) bars waiving (b) or (h) by cognovit note or otherwise.

Wages run on a separate and harsher track. Rule 2-646 makes a wage garnishment continuing: the garnishee withholds all garnishable wages and remits within fifteen days after the close of your last pay period each month, multiple writs are satisfied in the order served, and the garnishment ends ninety days after employment stops unless you are rehired. Com. Law §15-601.1(b)(1) exempts the greater of seventy-five percent of disposable wages or thirty times the Maryland state minimum hourly wage times the weeks earned, and §11-504(e) says flatly that the exemptions in that section do not apply to wage attachments. What usually precedes all of this is on our page about the thirty days before a freeze.

7. The Consumer Act Turns on the Transaction, Not on Who You Are

Maryland's Consumer Protection Act is worth understanding precisely, because the usual shorthand about it is wrong in an interesting way. Com. Law §13-408(a) gives the private action to any person who suffers injury or loss from a practice prohibited by the title, and §13-101(h) defines person to include a corporation, business trust, statutory trust, estate, trust, partnership, association and any other legal or commercial entity. The identity of the plaintiff is not the obstacle. Your company qualifies as a person without argument.

The obstacle is on the other side of the sentence. The action lies only for a practice prohibited by the title, and the title's prohibitions run to consumer goods, consumer services, consumer realty and consumer credit, all of which §13-101(d)(1) defines as credit, debts, goods, real property and services primarily for personal, household, family or agricultural purposes. Working capital funded into an operating company is none of those. So the Act fails on the character of the transaction rather than on the character of the plaintiff, and no amount of arguing about corporate standing fixes it.

What survives is worth listing so you know where to spend. Breach of the reconciliation or adjustment term as an ordinary contract claim, which after Guttman is where a Maryland file most often lives. Common law fraud where a broker made a specific statement about cost or term. A usury claim inside the very short §12-111(b) window on a covered smaller loan. And a motion under Rule 2-611(d) if a confessed judgment has already been entered. Maryland counsel who handles these files can sort which is real, and our Maryland page covers how those engagements run.

The One Maryland Rule That Still Protects a Guarantor

Real Prop. §4-108(a) confirms that any interest in property may be granted to the grantors themselves, or to themselves and another, in joint tenancy, tenancy in common or tenancy by the entirety without a straw man intermediary, and ratifies such grants as creating the form of ownership they purport to create. Subsection (b) requires spouses to act jointly to convey out of an entireties interest. The section speaks of any interest in property rather than any interest in real property, and it is the only section in that subtitle that mentions the estate at all.

How far entireties reaches into personal property here rests on case law rather than statute, and we could not verify it from a primary state source, so we will not state a rule on it. What the Code does say is at Cts. & Jud. Proc. §11-504(b)(10), which exempts, as against a separate creditor of a husband or wife, trust property immune from their separate creditors under Est. & Trusts §14.5-511.

That trust provision is the concrete piece and it is drafted tightly. Section 14.5-511(b) gives property once held by spouses as tenants by the entirety, and later conveyed to the trustee of one or more trusts, the same immunity from their separate creditors it would have had if they had kept holding it that way, so long as four conditions all hold: they remain married, the property or its proceeds stays in trust, both spouses are beneficiaries, and the instrument of conveyance says the section applies. Subsection (c) carries the immunity forward after the first spouse dies and (d) allows a waiver as to a specific creditor. Four conditions means four ways to lose it, and the last is a drafting requirement that gets missed.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.