Facing Arbitration

Arbitration is the preferred process that debt collectors and credit card companies take when attempting to collect debt. Unlike the filing of a lawsuit, the arbitration process starts with little fanfare. It comes in a letter stating that the process has started and informs the consumer on what to do. The problem is that whether it is a lawsuit or the arbitration process, they both lead to the same thing - the awarding of a judgment.

Judgments are the worst case scenario for the consumer. Once a judgment is awarded, the debt collector has an additional 10 years to attempt to collect the debt with ways that weren’t available prior to obtaining the judgment. Of course, it depends upon each state. For instance, in some states, a judgment gives the creditor the ability to garnish bank accounts. Not only that, but judgments are also renewable for another 10 years following the completion of the first 10 year period.

So what do you do if faced with a judgment? The answer is quite simple. You get an attorney to represent you. Statistics suggest that 93% of judgments that are served go through the process without the consumer even responding. So, who do you think that the creditor is going to pursue – the one with the attorney or the one without the attorney? I would suggest that the odds are in the favor of the consumer with the attorney.

Besides, even if they do pursue the judgment, you would want an attorney to make sure that you get the true benefit of the law. The worst thing you can do is ignore this. Of course, that is what the credit industry counts on.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.