DEBT ARBITRATION

 

Many businesses have included arbitration clauses in their agreements with consumers.  Frequently, these agreements are buried in a pile of transaction documents or sent as a stuffer with a monthly bill. The bottom line is that these agreements are not obvious to the consumer.

 

Therefore, when the consumer receives a notice from the National Arbitration Forum, the American Arbitration Association or other arbitration provider, they figure it does not apply to them.

 

WRONG.  NEVER ignore a notice like this.  Respond immediately.  Arbitration moves faster and less formally than traditional courts.  By the time you realize you need to take action, it may be too late. 

 

If you do nothing, a default judgment will be entered against you.  The judgment will be for the original debt, the outrageous fees, interest and penalties, and attorney’s fees.  Once an arbitration judgment is entered, the right of appeal is very limited. 

 

Lawsuit.  After the arbitration judgment is entered, a lawsuit can (and will) be filed to enforce the judgment.  Although your defenses are limited, you still need to understand what can and probably will be done to you. 

 

Writs of Garnishment, Writs of Execution, Turnover Orders, and Abstracts of Judgment may be enforced against you.  Bankruptcy may be an option.  Or not.  In any event, you need to visit with an attorney t see what can and what cannot be taken from you.

 

Before you see an attorney, you should NOT obtain a home equity loan, invade your retirement savings, or file bankruptcy. 

 

Bankruptcy.  The laws of Bankruptcy changed dramatically in October 2005.  Harris County individuals who make more than the Harris County median income of $70,000.00 (the number differs based on head of household.  This is an approximate number), may not be able to file for a Chapter 7 liquidation.  Chapter 13 Reorganization may not be attractive for many reasons, and may actually delay your optimal financial recovery.