Settling debt is a scary process for most people. While many choose to take the first settlement offered to them, there are forms of resolution available to those attempting to settle their debt. Debt arbitration is one of those forms and can often end in a good agreement between the two parties.
Debt arbitration is an alternative dispute resolution (ADR). In an arbitration both parties usually have a professional, for instance an attorney or a debt settlement advocate on their side. The arbiter, who is an independent third party, acts as a judge and jury and will listen to both sides, review all documentation, etc. and then come to a decision. Decisions made by the arbiter are legally binding. This means, no matter what the decision is by the arbiter both parties must comply. In very few casesthe agreement specifically states it is a non-binding agreement, at which point there is no legal obligation to comply. Arbitrations can only move forward if both parties agree to participate.
Both parties must agree to an arbitration. At that point they will have their own attorney or professional to represent them. The third party arbiter will be hand picked and agreed upon by both parties. Similarly, the date of the arbitration is set and agreed upon by both parties, not ordered; there are cons to this, for instance if there are scheduling difficulties an arbiter cannot make anyone appear.
Once the parties meet the two sides will present all evidence, documents and information pertaining to their side. The other party will then do the same. The arbiter makes a final decision and as stated above, it is usually binding and both parties will have to move forward in compliance. There are two instances when parties can withdraw from an arbitration. These are before a final decision has been made, and if there is no arbitration clause signed. There is no appeals process for arbitration.
Debt Arbitration is often a great resolution for people considering bankruptcy. However, it is important not to go into a debt arbitration assuming you will come out with all debts erased. A settlement is usually the outcome, do not think you will owe nothing when it is over. Also, with multiple creditors there may be a need for multiple arbitrations.
If you need assistance with debt arbitration contact a qualified bankruptcy attorney in your area. An attorney will be able to provide you with advice and the best possible outcome to your debt settlement.