What Is Debt Arbitration?

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Debt arbitration is when neutral third-parties negotiate settlements out of court between lenders and debtors. Understand that even with debt arbitration, debtors will probably still have to pay some money, with information from a certified public accountant and personal financial planner in this free video on debt.

Part of the Video Series: Tax Law, Real Estate & Credit Tips
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Video Transcript

Debt arbitrators are neutral third parties that negotiate out of court settlements between lenders and debtors that arise from significant amounts do to invoices, liens, or lawsuits. Right now, there is no consistent regulation at the national level or state level, in terms of qualifications, for being a debt arbitrator. However you may actually have already consented to a particular debt arbitrator in an agreement that you already have, such as a credit card agreement. The important thing to remember that you, if you do find yourself in debt arbitration and you're the debtor, you will most likely have to pay some amount. If you do find yourself in the situation where you have to find your own debt arbitrator, remember that both parties actually need to agree on this person. But, some places that you may want to look are retired judges or financial advisers, CPA's for example, or someone in the field in in which that your debt is related. Now even if they don't end up being your actual arbitrator, it does help to have them on your side in terms of advising you on what to do during these negotiations.

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