Explanation of House Bill 1557

What is this bill about?

This bill creates a special program called the Program to Protect Individuals Unemployed or Furloughed Due to Federal Actions. It is aimed at helping people in Maryland who lose their jobs or are temporarily not working (furloughed) because of certain federal government actions – for example, a federal government shutdown or federal budget changes starting January 2025.

Key Points of the Bill

• Who qualifies?
  • Federal employees furloughed for 30 days or more during a government shutdown.
  • People unemployed because of federal government personnel actions, budget cuts, contract cancellations, or funding changes starting January 20, 2025.
  • Former federal contractors or employees/business owners affected indirectly by those federal actions.
• The program is run by: The Maryland Department of Labor, which will administer applications, verify eligibility, and notify qualified individuals of their rights.
• Protections provided:
  • Debt collection: Debt collectors must accept partial payments from qualified individuals and cannot charge late fees or repossess property based on debts related to their situation.
  • Credit reports: Consumer reporting agencies cannot add negative credit information about these individuals while they qualify for the program, effectively freezing bad marks related to this situation.
  • Loans and mortgages: Banks, credit unions, mortgage lenders, and loan originators must accept partial payments on home mortgages from qualified individuals and cannot charge late fees for missed payments during this time. They also must allow interest-free payment plans to pay back missed amounts over two years.
  • Utility services: Utility companies (such as electric and gas providers) cannot shut off service or charge late fees if the customer is a qualified individual and works out a payment plan.
  • Foreclosure, rent, and eviction protections: Courts must pause foreclosure or eviction cases involving qualified individuals for a reasonable time while verifying their status and allow partial rent payments without late fees or penalties.
  • Tax sales: The sale of a qualified individual's home for unpaid taxes must be withheld or delayed.
• Verification and application: Qualified individuals can apply to the program through the Maryland Department of Labor. They or their landlords etc., may request official verification of their status to get these protections.
• Time limits:
  • An individual can only be a qualified participant for up to 1 year or while not working.
  • After this period, protections may end but individuals can still work out payment plans.

What does this mean to everyday people?

If you are a federal worker or contractor affected by a federal shutdown or budget changes starting 2025 and lose your job or get furloughed for at least 30 days, this program gives you important protections:

• You won’t be hit with late fees or penalties on your bills or home loans during this time.
• Your credit report won’t be marked negatively because of this unemployment status.
• You can set up manageable payment plans to pay back what you owe.
• Your utility services can’t be cut off if you communicate and make payment arrangements.
• If you rent or own a home, eviction or foreclosure actions can be paused to give you time to recover.

The program is designed to give you some financial breathing room and consumer protections while you face job interruptions due to federal government actions beyond your control.

Emergency Measure

This bill takes effect immediately to quickly provide protections because it concerns urgent financial hardships caused by federal government shutdowns or changes.

Note: The bill also applies retroactively to certain loans and legal actions started before its effective date, so people already in those situations can benefit from these protections.