Maryland Unsecured Promissory Note Overview
An unsecured promissory note in Maryland is a loan agreement where the borrower promises to repay without pledging any collateral. The lender relies on the borrower's creditworthiness and the legally enforceable promise to pay. The maximum interest rate in Maryland is 8% (default).
8% default rate; 24% maximum for most consumer loans; no cap for business loans over $15,000. Unsecured notes carry more risk for the lender, so interest rates are typically higher than secured notes. However, the rate must still comply with Maryland's usury laws.
If the borrower defaults, the lender's primary remedy is filing a lawsuit within Maryland's statute of limitations (3 years (oral), 12 years (written)). The small claims court limit in Maryland is $5,000, which is ideal for smaller unsecured loans.
8% (default)
Usury rate cap
3 years
Statute of limitations
$5,000
Small claims limit
25%
Max garnishment
Maryland Legal Requirements
Maryland has specific requirements for unsecured promissory notes:
Important: Maryland Usury Laws
Maryland's maximum interest rate is 8% (default). 8% default rate; 24% maximum for most consumer loans; no cap for business loans over $15,000. Exceeding this limit may void the interest or result in penalties.
- Written Agreement: Must be in writing, signed by borrower, clearly stating loan terms
- Compliant Interest Rate: Must not exceed Maryland's 8% (default) usury cap
- No Collateral Statement: Explicitly state that the note is unsecured with no collateral pledged
- Default Provisions: Events of default, cure period, acceleration clause, and collection remedies
- Personal Guarantee: Recommended for business borrowers to protect the lender
- Governing Law: Specify Maryland law as the governing jurisdiction
Collection Remedies in Maryland
If a borrower defaults on an unsecured promissory note in Maryland, the lender has several collection options:
Send a Formal Demand Letter
Written notice demanding payment within a specified timeframe, creating a paper trail
File in Small Claims Court ($5,000 limit)
Fast, affordable, no attorney required for amounts within the limit
File a Civil Lawsuit
For amounts above small claims limits, file in Maryland civil court
Enforce the Judgment
Up to 25% of disposable earnings; $145/week exempt. Bank account levies and property liens also available
Statute of Limitations in Maryland
The statute of limitations for collecting on a promissory note in Maryland is 3 years (oral), 12 years (written). After this period, the lender loses the right to file a lawsuit to enforce the note.
| Aspect | Maryland Rule |
|---|---|
| Usury Rate | 8% (default) |
| Statute of Limitations | 3 years (oral), 12 years (written) |
| Small Claims Limit | $5,000 |
| Garnishment Rules | Up to 25% of disposable earnings; $145/week exempt |
Sample Maryland Unsecured Promissory Note
Below is a preview of our Maryland-specific unsecured promissory note template.
STATE OF MARYLAND
UNSECURED PROMISSORY NOTE
No Collateral Loan Agreement
LENDER:
Name: [Lender Name]
Address: [Maryland Address]
BORROWER:
Name: [Borrower Name]
Address: [Maryland Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max 8% (default) in MD)
This note is UNSECURED. No collateral has been pledged.
Maryland Unsecured Promissory Note FAQ
Answers to common questions about unsecured promissory notes and collection procedures in Maryland.
Official Maryland Resources
Use these official resources for Maryland lending laws and court procedures.
Other Maryland Promissory Note Types
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