Debt arbitration is a process is which the consumer works with their creditors and a neutral third party mediator towards finding a solution to resolve any unpaid debts and bills that they have. An arbitrator is a neutral, third party that works on behalf of consumers. However, since they mediate, they will not just come up with a solution that strictly benefits the client that entered into a contract with them. Instead they try to find a fair solution that works for both parties, including the creditor.
Oftentimes attorneys or other professionals serve in this role. They try to negotiate settlement agreements for old debts, including credit cards and medical debt. They can also address health care expenses, utility bills, and other types of expenses or debts that a consumer may have.
In most arbitration cases your entire debt won’t be eliminated, but instead there will be some type of negotiation that occurs that will result in a settlement program. The clients will usually have some type of repayment schedule that they need to follow and adhere to. Some of the debt or unpaid bills may be waived by your creditor as part of the arbitration program, but this is not always the case.
Lawyers can help with the process. A consumer can either seek out an attorney on their own and enter into a a debt arbitration program with them, or they can be ordered to enter into this type of program by a bankruptcy court or judge. They may receive some other legal advice as part of this process as well.
When you are exploring this option, the decision you make whether to hire an attorney or not to settle your debts should be based upon the type of expenses that you owe. Be sure to also consider the amount owed, and any attorney fees or costs that may need to be paid. For example, if you do not owe an extreme amount of money to a creditor, it usually isn’t the best option to use a lawyer as the fees and costs may make it prohibitive to do this.
Attorneys can also provide mortgage assistance. If you are a homeowner that is struggling with your home loan or other costs, learn about loan modifications from lawyers.
Be sure to contact many agencies and law firms as most attorneys will offer a free consultation to discuss your financial situation. Before entering into a contract, ensure that you review the terms of the contract closely and understand any fees or costs that may be involved. You can get a referral to a lawyer to help in the process from your state bar association, or a local, non-profit law firm.
The mediator, company, or attorney that you use for this program will try to get a portion of your debt eliminated, they will seek to waive fees, lower or eliminate any special expenses and charges, and reduce interest rates.
In addition, the arbitrator needs to keep your credit report and score in mind. For example, they should closely review your credit ratings, with the goal of improving your scores and credit report. They need to work to correct any false or negative information on your report that may have been filed with credit bureaus.
Unfortunately this process will not solve all the issues that a consumer may have. The debt arbitration process cannot settle or address any secured debts that the client may have, such as student loans, child support, mortgage payments, or alimony. The person who you use can only try to resolve unsecured debt, which includes credit card and medical bills.
The arbitration process is usually a win win for the creditor and the debtor as it can arrive at a solution that benefits both parties. It is usually regarded as a great solution as the person who is owed the money, whether a credit card company, hospital, or other business, does not lose all the money they are owed, and the client does not have to file bankruptcy. In almost all cases a bankruptcy is a poor option for everyone, and your credit is negatively impacted, and the creditor probably will not receive a cent from you if you need to file.
The arbitrator you decide to work with, whether an attorney, mediator or another professional, will work closely with the consumer and his or her creditors to negotiate some type of solution and program. The parties will develop a repayment schedule that is agreeable to everyone involved in the program. At the end of the day, in many cases the debtor will need to make just a single monthly payment to the debt arbitration service or company. What will then happen is this organization or person will then distribute the payments to each of the creditors on a monthly basis. The third party you work with will seek to lower or eliminate any assessed late fees or penalties, reduce premiums and interest rates, and save the client as much money as possible.
The goal of the lawyer or arbitrator is to find a debt settlement agreement and schedule that works for you and the lender. Once everything has been agreed to, all you will need to do is to make your prescribed monthly payments, live within your means, keep up good spending habits and you'll be back on your way to financial freedom and long term self-sufficiency.
Whether you decide to voluntarily start the process, or are forced into it by a court, you may want to explore a settlement program with a lawyer in your area rather than a settlement company. There are many places you can turn to for guidance and/or legal advice, including you can get a referral from an attorney that you consult with regularly, you can contact your state bar association, or ask the advice of someone that you know and trust. Also check references, whether you use a lawyer or someone else.
As you go through the process, at the very minimum consulting with an attorney can give you a free consultation and a solid analysis of your personal and financial situation. They can usually advise you on what would be a reasonable solution to your debt problem.
You can call around in your local town or city to find an attorney, or ask friends and family for referrals. Or a better option would be to call a local non-profit law firm in your state or county to get referrals and to learn more about how attorneys can provide debt settlement and reduction services. Click here to find a listing of non-profit law firms.
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