Debt Arbitration: Take Your Disputes to a Neutral Third Party |
By Stewart Pelto on July 6, 2010
.jpg.aspx?width=75&height=75) You and your creditor are having a debt-related argument that cannot be settled by your combined efforts alone. You both decide to take your dispute to a neutral third party for a fair resolution. You then agree that the arbiter’s decision is legally binding for the both of you. This is debt arbitration.
When you’re in debt trouble and contemplating bankruptcy, investigate arbitration instead. If you can both come to a successful agreement – a set number of reduced monthly payments or a chunk of your balance paid in lump sum – then you won’t have to suffer the long-reaching consequences of declaring bankruptcy and your creditor will collect on part of the money he’s owed. [Just make sure the leftover debt doesn’t become a zombie.]
You must BOTH agree to the neutral third party in question – which can tip things in your favor. But if you didn’t pay attention to the fine print of your credit card agreement or your automobile loan, you may have agreed in advance to an arbitrator that isn’t neutral. Don’t fret – you can still find somebody to represent you in front of the arbitrator much like an attorney in front of a judge.
Look to financial advisors, CPAs, retired judges, specialists in your field of debt, or credit counseling agencies. Find somebody you trust, make sure they are knowledgeable, and then be open to any reasonable agreement they make between you and your creditor. Don’t expect to come off scot-free without any payments, but do expect to end up with a manageable monthly path to debt freedom.
Be careful – there are no consistent regulations at either the state or national levels for debt arbitration companies. The government relies on industry associations to issue certifications and develop moral codes of business conduct. Some of these companies are not going to be legitimate. Anybody who offers to eliminate your debt completely can be thrown out immediately as a sham.
Even if these professionals do not end up representing you in arbitration they can still give you plenty of advice on how to do it yourself or find somebody who is willing and qualified.
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