Attorneys general from 41 states, including Georgia, and the District of Columbia announced Tuesday they have reached a settlement, including a $6 million cash payment, with Encore Capital Group Inc., one of the nation's largest debt buyers, and its subsidiaries Midland Credit Management Inc. and Midland Funding.

Georgia Attorney General Chris Carr said Tuesday the settlement requires Midland to eliminate or reduce the judgment balances of approximately 5,136 Georgia consumers, a reduction totaling $8.73 million. The affected cases are those in which Midland used an affidavit against the consumers in court between 2003 and 2009, Carr said. Midland is to notify impacted consumers by mail of the balance reduction and alert them that no further action is necessary from the consumer, Carr said.

Midland has agreed to pay $6 million to the states, of which Georgia's share is $177,781, according to Carr.

In addition, the settlement obligates Midland to set aside $25,000 per state to compensate consumers who may have paid Midland money that they didn't actually owe.

The deal requires restitution and reforms to the practice of “robosigning”—a term that originated with the mortgage foreclosure crisis, referring to the mass-processing of rubber-stamped or false debt documents.

“Robo-signing by Encore Capital Group Inc. and its subsidiaries was unjust and hurt consumers,” Georgia Attorney General Carr said in a news release Tuesday. “I am proud of our Consumer Protection Division's work throughout this process to protect the citizens of Georgia and hope this action sends a strong message to debt collectors that this behavior will not be tolerated.”

Encore Capital Group and Midland are based in San Diego. A corporate spokeswoman shared a statement from the company saying the “issues that were the genesis of the settlement have not been the company's practice for nearly 10 years.” The company also said the settlement will “cause no material impact to the business.”

Encore's most recent quarterly revenue statement showed $337 million in gross income and $21 million in profit. At that clip, the company would have annual revenue approaching $1.3 billion and profit near $88 million.

Encore said the funds for the settlement were fully reserved in 2015. The terms include a one-time cash payment of $6 million that will be divided among the states and $25,000 per state, available as relief for certain consumer claims. Also included are credits to the outstanding balance of certain judgments obtained against consumers between 2003 and 2009. Additionally, the agreement sets out operational requirements, nearly all of which are already part of current practice. Most of the requirements were implemented during or prior to Encore's negotiations with the attorneys general.

“Several years ago, we began discussions with various attorneys general, which ran in parallel to our discussions with the Consumer Financial Protection Bureau (CFPB) and covered similar topics. We settled with the CFPB in 2015 and are pleased to have reached today's agreement,” Ashish Masih, president and CEO of Encore, said in the company's release. “While we believe our practices were in accordance with relevant laws, we chose to agree to a settlement, so we can all move ahead.”

Masih said the new settlement and the CFPB agreement before it “actually strengthen our competitive position, as they've set the standard for the entire sector.” Masih added, “We are well positioned to continue our industry leadership in this regulatory environment.”

Debt-buying involves buying and selling overdue debts from creditors and other account owners at deep discounts, Carr noted. The debt buyers then seek to recover the full balance from consumers through collection attempts, by phone and mail and by litigation, if necessary. Debtors often lack counsel, and cases result in default judgments, affecting credit ratings and creating the possibility of wage garnishment, Carr said.

The settlement resolves the states' investigation into Midland's collection and litigation practices.

Carr's release encourages consumers who believe they are eligible for compensation under the settlement to complete and submit the claim form, downloadable from the Georgia Department of Law's Consumer Protection Division website at: www.consumer.ga.gov.

The settlement protects consumers from whom Midland is collecting, even if they aren't being sued, as the company must review original documents, if a consumer disputes a debt, and provide the documents free of charge. The company also agreed to properly train employees and the law firms with which it works.

The settlement includes: Alaska, Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii , Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming.