Reduce or eliminate debt through arbitration.
Debt arbitration is a process is which the consumer works with their creditors and a neutral third party mediator towards finding a solution. The goal is for that solution to benefit both the lender and the consumer, and to make the deal a so called “win-win”. The end result of arbitration is to hopefully to resolve any unpaid debts and bills that they have.
An arbitrator is a neutral, third party that works on behalf of consumers and also, maybe, the lender. 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, including free non-profit credit counselors, 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, automobile loans 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.
Attorneys can help with debt arbitration
Lawyers can help with the process. Or there may be mediators used as well, but they need to specializer in debt reduction and have experience to their name. 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. Or maybe a community action agency or some other non-profit counseling agency will refer them. 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, interest rates, 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 as well as the costs to use them may make it prohibitive to do this.
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.
In addition, attorneys can also offer assistance with other bills. They can provide mortgage assistance or general free legal aid. If you are a homeowner that is struggling with your home loan or other costs, learn about loan modifications from lawyers.
What does debt arbitration accomplish
The mediator, company, or attorney that you use for this program will try to get a portion of your debt eliminated. In addition, 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 to ensure they do not go even lower. The arbitrator should go 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.
What can’t be addressed
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.
Debt settlement arbitration programs
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, bank or other business, does not lose all the money they are owed. And of course the client does not have to file bankruptcy, lose their home, or go through worse issues. 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 or assistance program. The parties will develop a repayment schedule that is agreeable to everyone involved in the program. But the solution agreed to often varies widely.
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 as well as 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 as well as related 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 as well as long term self-sufficiency.
Attorneys who specialize on debt arbitration and negotiation
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. This should include 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.
Find a lawyer or mediator to help settle debts
In order to find a lawyer, 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 as well as reduction services. Click here to find a listing of non-profit free law firms.
Other mediators, which may or may not be attorneys, can often be provided by non-profit credit counseling firms. There are both local and national options. Most offices offer some form of free debt arbitration program to consumers, even low income families. Find a listing of free not for profit debt and credit counselors.