If you are a debt collector or creditor, you will likely encounter debtors who refuse to pay their debts. For these situations, creditor’s rights arbitration is a simplified, cost-saving process that allows debtors to recoup the money that is owed to them quickly and easily, without the hassle of going through the litigation process.
Debt collectors have several ways to seek legal remedy for money that is owed to them or to one of their clients, including creditor’s rights arbitration. Creditor’s rights arbitration allows a creditor to present a claim of debt that is owed to a neutral, third-party arbitrator. The arbitrator or panel of arbitrators will then hear all of the details of the case from both sides (the creditor’s and the debtor’s) and render a legally binding judgment.
Upon being served notice of creditor’s rights arbitration, the debtor should find out all he or she can about the rules and procedures governing the arbitration process. These could include deadlines for submitting paperwork, evidence or testimony; and costs or fees associated with the process. There are generally clear outlines detailing which costs are covered by either party (either the claimant or the respondent), and any requests for “fee waivers” should be addressed during this initial process.
If the respondent (or debtor) wishes to obtain the services of an attorney for legal counsel during the arbitration process, he or she is free to do so. However, this is not necessary. Also, if a debtor is deemed by the arbitrator to owe money to the debt collector, that debt collector must then petition the court to confirm the award and issue a garnishment or levy against the debtor’s paycheck or property.
Although creditors’ rights arbitration allows for an easier, streamlined process for using legal means to collect on an unpaid debt, it is not right for every situation. To learn if your creditor’s rights claim is suitable for arbitration instead of traditional litigation, consult a creditor’s rights arbitrator who is licensed to practice in your area.