If you are sued by a debt collector, you may be able to avoid going to court (ar at least delay it) by filing a Motion to Compel Arbitration. Depending on the circumstances in your case, you could very well file this motion without the assistance of an attorney.
What is arbitration?
Arbitration is a process in which the parties involved in a legal dispute agree to empower one or more individuals to render a decision about the legal dispute after receiving evidence and hearing arguments. You may be asking yourself, “how is arbitration different from mediation?” Well, arbitration is different from traditional mediation since the arbitrator is empowered to render a decision that would resolve the legal dispute. In mediation, the mediator is focused more on finding ways for the parties to reach an amicable resolution between one another.
In other words, arbitration gives you the chance to settle a debt lawsuit outside of court. The arbitrator, an impartial and trained professional, hears both sides of the story and makes a decision.
Arbitration can be binding or non-binding. When arbitration is binding, the decision rendered by the arbitrator is final and can actually be enforced by a court with the ability to appeal in only limited circumstances. In contrast, when arbitration is non-binding, the arbitrator's decision is considered to be a recommendation and is only enforceable if the parties accept the recommendation.
Many contracts and agreements contain arbitration clauses. As a result, there are a number of state and federal laws on the books that allow an individual to compel arbitration. Though, there are a number of prerequisites that need to be met in order to effectively get a court to compel arbitration. For example, you need to make sure you have a valid arbitration agreement.
Here's a typical arbitration provision in a contract
A typical arbitration provision in a contractual agreement says something like: “All disputes or claims relating to or arising under this Contract will be settled with binding arbitration in [State XYZ|. Any court with competent jurisdiction may confirm the award.”
If you want to compel a party to participate in arbitration, make sure that the legal dispute falls within the parameters of the arbitration provision in the contract. For example, there are some arbitration agreements that contain exceptions or exclusions for what is covered. A contract might require arbitration for compensatory disputes but not for disputes related to the quality of work completed in a project.
If your dispute is eligible for arbitration, another key issue is determining where you agreed to arbitrate the dispute. When you file your Motion to Compel Arbitration, it should be in the district where your arbitration is supposed to occur. You can figure this out by reviewing your arbitration provision. There is typically language that specifically states where an arbitration can take place.
State Court or Federal Court?
Another issue to address is whether to pursue arbitration in state court or federal court. The Federal Arbitration Act (“FAA”) is a federal statute, but it does not guarantee or mandate that someone seek arbitration in federal court. Nevertheless, it may make sense to try and pursue arbitration through a federal court since many federal courts appear to favor granting arbitration. Even if you are unable to file in federal court, you can still file in state court because the FAA applies at the state level.
To learn more about what documents are needed to compel arbitration, consider utilizing the resources and information available through SoloSuit.
AAA, JAMS, and Forum are the main arbitration providers
American Arbitation Association (AAA), JAMS Solutions, and Forum are the three primary arbitration organizations in the US. If your Motion to Compel Arbitration has been accepted by the court, it is very likely that your arbitration case will involve one of these three organizations.
Arbitration can be a great option because it costs a pretty penny, but usually the debt collector or bank are responsible for arbitration fees. AAA, JAMS, and Forum each have their own fees and costs for arbitration, and the arbitration clause in your contract outlines who is responsible for paying these costs.
Since collectors are often responsible for arbitration costs, they would rather drop the case then move forward with arbitration. This is why filing a Motion to Compel Arbitration can help you take back the reins in your debt lawsuit.
Here are the costs and fees for arbitration through AAA and JAMs:
As you can see, arbitration gets pretty expensive. If your contract states that the collector is responsible for arbitration fees, filing a Motion to Compel Arbitration might your best option.
Arbitration clause example
Here's a real example of an arbitration clause, as sited in a contract with Synchrony Bank:
RESOLVING A DISPUTE WITH ARBITRATION
PLEASE READ THIS SECTION CAREFULLY. IF YOU DO NOT REJECT IT, THIS SECTION WILL APPLY TO YOUR ACCOUNT, AND MOST DISPUTES BETWEEN YOU AND US WILL BE SUBJECT TO INDIVIDUAL ARBITRATION. THIS MEANS THAT: (1) NEITHER A COURT NOR A JURY WILL RESOLVE ANY SUCH DISPUTE; (2) YOU WILL NOT BE ABLE TO PARTICIPATE IN A CLASS ACTION OR SIMILAR PROCEEDING; (3) LESS INFORMATION WILL BE AVAILABLE; AND (4) APPEAL RIGHTS WILL BE LIMITED.
What claims are subject to arbitration
If either you or we make a demand for arbitration, you and we must arbitrate any dispute or claim between you or any other user of your account, and us, our affiliates, agents and/ or dealers/merchants/retailers that accept the card or program sponsors if it relates to your account, except as noted below.
We will not require you to arbitrate: (1) any individual case in small claims court or your state’s equivalent court, so long as it remains an individual case in that court; or (2) a case we file to collect money you owe us. However, if you respond to the collection lawsuit by claiming any wrongdoing, we may require you to arbitrate.
Notwithstanding any other language in this section, only a court, not an arbitrator, will decide disputes about the validity, enforceability, coverage or scope of this section or any part thereof (including, without limitation, the next paragraph of this section and/or this sentence). However, any dispute or argument that concerns the validity or enforceability of the Agreement as a whole is for the arbitrator, not a court, to decide.
No Class Actions
YOU AGREE NOT TO PARTICIPATE IN A CLASS, REPRESENTATIVE OR PRIVATE ATTORNEY GENERAL ACTION AGAINST US IN COURT OR ARBITRATION. ALSO, YOU MAY NOT BRING CLAIMS AGAINST US ON BEHALF OF ANY ACCOUNTHOLDER WHO IS NOT AN ACCOUNTHOLDER ON YOUR ACCOUNT, AND YOU AGREE THAT ONLY ACCOUNTHOLDERS ON YOUR ACCOUNT MAY BE JOINED IN A SINGLE ARBITRATION WITH ANY CLAIM YOU HAVE.
If a court determines that this paragraph is not fully enforceable, only this sentence will remain in force and the remainder will be null and void, and the court’s determination shall be subject to appeal. This paragraph does not apply to any lawsuit or administrative proceeding filed against us by a state or federal government agency even when such agency is seeking relief on behalf of a class of borrowers, including you. This means that we will not have the right to compel arbitration of any claim brought by such an agency.
How to start an arbitration, and the arbitration process
The party who wants to arbitrate must notify the other party in writing. This notice can be given after the beginning of a lawsuit or in papers filed in the lawsuit. Otherwise, your notice must be sent to Synchrony Bank, Legal Operation, P.O. Box 29110, Shawnee Mission, KS 66201-5320, ATTN: ARBITRATION DEMAND. The party seeking arbitration must select an arbitration administrator, which can be either the American Arbitration Association (AAA), 1633 Broadway, 10th Floor, New York, NY 10019, www.adr.org, 1-800-778-7879, or JAMS, 620 Eighth Avenue, 34th Floor, New York, NY 10018, www.jamsadr.com, 1-800-352-5267. If neither administrator is able or willing to handle the dispute, then the court will appoint an arbitrator.
If a party files a lawsuit in court asserting claim(s) that are subject to arbitration and the other party files a motion with the court to compel arbitration, which is granted, it will be the responsibility of the party asserting the claim(s) to commence the arbitration proceeding.
The arbitration administrator will appoint the arbitrator and will tell the parties what to do next. The arbitrator must be a lawyer with at least ten years of legal experience. Once appointed, the arbitrator must apply the same law and legal principles, consistent with the FAA, that would apply in court, but may use different procedural rules. If the administrator’s rules conflict with this Agreement, this Agreement will control.
The arbitration will take place by phone or at a reasonably convenient location. If you ask us to, we will pay all the fees the administrator or arbitrator charges, as long as we believe you are acting in good faith. We will always pay arbitration costs, as well as your legal fees and costs, to the extent you prevail on claims you assert against us in an arbitration proceeding which you have commenced.
Governing Law for Arbitration
This Arbitration section of your Agreement is governed by the Federal Arbitration Act (FAA). Utah law shall apply to the extent state law is relevant under the FAA. The arbitrator’s decision will be final and binding, except for any appeal right under the FAA. Any court with jurisdiction may enter judgment upon the arbitrator’s award.
How to reject this section
You may reject this Arbitration section of your Agreement. If you do that, only a court may be used to resolve any dispute or claim. To reject this section, you must send us a notice within 60 days after you open your account or we first provided you with your right to reject this section. The notice must include your name, address and account number, and must be mailed to Synchrony Bank, P.O. Box 965012, Orlando, FL 32896-5012. This is the only way you can reject this section.
What is SoloSuit?
SoloSuit makes it easy to respond to a debt collection lawsuit.
How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.
Sued for credit card debt? Use our Motion to Compel Arbitration.
Our Motion to Compel Arbitration is the best way to beat a credit card debt lawsuit. Many debt collectors will simply give up after receiving it.
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
Some creditors, banks, and lenders have an internal collections department. If they come after you for a debt, Solosuit can still help you respond and resolve the debt. Here’s a list of guides on how to resolve debt with different creditors.
If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.
Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.
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It only takes 15 minutes. And 50% of our customers' cases have been dismissed in the past.
"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" – Heather