February 22, 2022
Summary: File a Motion to Compel Arbitration to stop your debt collector in his tracks.
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.
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.
You can file a Motion to Compel Arbitration with SoloSuit and avoid hiring an attorney. Here are the possible outcomes of filing a Motion to Compel Arbitration:
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.
The Consumer Financial Protection Bureau has comipled a database of most credit card and bank agreements where you can check the arbitration clause for your contract.
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.
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.
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.
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.
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.
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.
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.
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.
"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
Here's a list of guides for other states.
Being sued by a different debt collector? We're making guides on how to beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.