How to Deal With Arbitration Judgment Over Credit Card Debt
Mandatory arbitration is a way in which lenders avoid costly court trials with individual consumers. The arbitration agreement is normally buried in the small-font legalese of the credit agreement, and most consumers are unaware of the implications of the agreement. If you find yourself in the throes of an arbitration proceeding, it's important to know your rights so the handling of the judgment is fair and accurate.
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Things You'll Need
- Attorney
- Payment history on the account in question
- Copy of credit report
- Original credit agreement
Instructions
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Obtain legal counsel. While an arbitration proceeding will not be handled in court, this does not mean you cannot obtain representation to help you through the process and even to speak on your behalf. This is a critical step as fighting a massive corporate conglomerate--especially a banking conglomerate--is highly challenging. See Resources for a list of consumer advocates specializing in arbitration proceedings.
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Pull a copy of your credit report (see Resources for a free copy of your credit report). You'll want to confirm the existence of the account in question. Most arbitration agreements are convened in order to compel a borrower to repay a bad debt. Some consumer advocate groups have brought suits against major credit firms for illegally using arbitration to ramp up their collection efforts. Confirm the account is past due or charged off and make sure the amounts match with your records. If the account has been paid, bring this up with your attorney and provide all supporting documentation.
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Find the original copy of the credit agreement on the account in question. As stated earlier, often arbitration agreements are buried in small print loan agreements. Find the arbitration agreement (if it's there--if it's not, you have a legitimate case to cease the arbitration proceeding and counter-sue the company); photocopy the agreement, provide a copy to your attorney so he or she can make sure the company abides by its contract.
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Contact the American Arbitration Association (AAA; see Resources) if you feel you've been wronged or cheated after the arbitration judgment. This trade group handles the oversight of most arbitration cases. Make sure to be tenacious and unrelenting in your case to correct any errors caused by arbitration. Use your attorney to apply pressure to the arbitration community.
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Accept the arbitration judgment if it's accurate, fair and honest. Remember, a bad debt is your problem. The only other way to avoid bad debts is bankruptcy. Attempt to renegotiate terms of repayment on the bad debt if you feel you'll be unable to make on-time payments. Work with your attorney to make a manageable payment schedule.
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