Creditor’s rights arbitration is growing in demand due to increasing restrictions placed on the debt collection industry by government regulators. However, with new Consumer Financial Protection Bureau (CFPB) regulations pending and a job market that is still performing poorly, creditors are facing difficult times collecting on debt that is owed. Not only are creditors limited in how and when they can collect on a debt—they are also limited in the time and legal framework in which to do it.
Creditor’s rights refer to protection of the processes and ability of creditors to recoup the money that is owed to them. This is money that was taken out by the debtor at an agreed upon rate of interest and money that should be returned to the creditor according to the terms of that agreement. Despite the restrictions, creditors do have ways to collect on debt and a creditor’s rights arbitration process can be one such way to do it successfully, quickly and cheaply.
While each jurisdiction has its own rules, most allow a creditor to put a lien on a debtor’s house, force the sale of property, and garnish a debtor’s paycheck under certain provisions and restrictions. A creditor’s rights arbitrator will be able to look at the situation from an objective point of view, and determine what recourse, if any, a creditor has in pursuing repayment of a debt.
In creditor’s rights arbitration, a neutral, third-party arbitrator or panel of arbitrators will consider the details of the dispute. These disputes might be between creditors and debtors, or they could disputes arising between creditors. Disputes between creditors is becoming more common, especially as bankruptcy rates skyrocket and many creditors are left to shoulder the cost that unpaid debt can have on business operations and the potential future growth of a company.