What is the MVA Central Collection Unit's insurance lapse default penalty?

The MVA Central Collection Unit does not have a specific default penalty for unpaid insurance lapse fees, but drivers can be sued for amounts owed and have their wages, assets, or tax refunds garnished. The Maryland Motor Vehicle administration, or MVA, transfers demands for unpaid insurance lapse fees to the Central Collection Unit (CCU), the state’s debt collection agency. The CCU then uses a variety of methods to collect, including notices and property seizure.

How MVA Insurance Lapse Fees Work

Maryland’s insurance lapse fees add up quickly, since the state charges $150 for the first 30 days without insurance on a registered car and $7 for every day after that. Every 30 days, the state will send a statement asking for payment. Then, if you have not paid after three consecutive statements, the CCU takes over.

Because the CCU reports to credit bureaus, unpaid insurance lapse debts will hurt your credit score. In addition, if you fail to pay and your balance is $750 or more, the CCU may sue, thereby gaining the right to garnish assets and wages. Garnishing means that your assets or income can be taken away – the CCU can even intercept your state tax refund. These methods show that despite the lack of a formal default penalty, the Maryland MVA is serious about getting the money you owe.

What To Do About Central Collection Unit Debts for an MVA Insurance Lapse

If you believe your insurance lapse fees were issued wrongly, it’s best to address the problem immediately. For example, some Maryland drivers have reported receiving notices about cars that they had sold or registered in another state. If this is the case, you should proactively provide proof of insurance or proof that you no longer had the car to avoid having unfair fees accumulate. You cannot request an appeal after your tax refund has been taken.  

Similarly, if you owe the MVA money for insurance lapse fees, paying sooner rather than later will help save you time, hassle, and damage to your credit. The CCU offers payment plans if your fees are too expensive to pay at once. And if you plan to cancel your insurance coverage, make sure to turn in your license plates to the MVA so you won’t be fined.

Finally, if CCU collection efforts have harmed your credit standing, you can get free, personalized advice on how to raise your credit score with WalletHub. You can also check out the best cheap car insurance policies in Maryland to find more affordable coverage.