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What Happens in Arbitration?

Sarah Edwards | April 23, 2024

Sarah Edwards
Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: In arbitration, both sides explain their perspectives, present documents and witnesses, and an arbitrator weighs the evidence and makes a decision. The formality of the arbitration proceeding varies by arbitrator. Let SoloSuitcan help you draft a Motion to Compel Arbitration online in minutes.

Often, winning your debt collection lawsuit comes down to making the right strategic moves. And in some situations, the right strategic move can be filing a Motion to Compel Arbitration. Check out our guide to what happens in an arbitration hearing and when you should file a Motion to Compel Arbitration.

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What is arbitration?

The process of arbitration takes the court case filed by a creditor or collection agency and pushes it out of the courtroom into a private process. In this process, an arbitrator works with you and the debt collector to come to a resolution.

Arbitration is often legally binding, just as a resolution to a lawsuit would be. However, in some cases, the arbitrator simply makes a recommendation.

If a creditor files a lawsuit against you, you have the option to file a Motion to Compel Arbitration. If you do so, there are three possible outcomes:

  • The court agrees to the motion, and your case moves from a lawsuit to arbitration.
  • The court denies the motion, and the debt lawsuit proceeds.
  • The creditor decides they would rather not deal with arbitration, so they file a motion to dismiss the case.

If you decide to file a Motion to Compel Arbitration, you aren’t giving up your right to a settlement. You and the creditor can still agree on a settlement at any point.

Before compelling arbitration, understand who pays

In some cases, arbitration is a great alternative to a debt lawsuit. But before you even consider filing, make sure you understand who is responsible for paying and other arbitration rules. The cost of arbitration can vary, but there is often a filing fee of around $1,000 to $2,000.

Arbitrators also charge an hourly fee, and these fees can vary. On the low end, they’re about $150 per hour. On the high end, they’re about $400 to $500 per hour.

So how do you know who pays? Your credit agreement should outline who covers arbitration in the arbitration clause. In cases when a credit card company sues you, the creditor is often responsible for the cost.

Sometimes, you’ll be responsible for the cost. And sometimes, you and the creditor split the cost.

In most cases, it’s not logical for you to file a Motion to Compel Arbitration if you’re responsible for the cost. It’s usually not ideal if you and the creditor split the cost. However, if the creditor is solely responsible for arbitration costs, filing a Motion to Compel Arbitration might increase your chance of getting the case dismissed.

When and why should you file a Motion to Compel Arbitration?

Generally speaking, if your debt is around $20,000 to $30,000 or less, filing a Motion to Compel Arbitration can be a smart tactical move — as long as the creditor is responsible for arbitration costs as outlined in the arbitration clause in your credit card agreement.

In cases like these, the creditor is more likely to drop the case or agree to a smaller settlement. When your debt is around $20,000 or $30,000 (which is not a lot of money to a credit card company or other creditor), there’s a risk that the cost of arbitration will be greater than the amount of your debt.

If you think that filing a Motion to Compel Arbitration is the right choice, you also need to know the correct timing for filing. The best time to file is right after you’ve been sued for a debt. Instead of filing an Answer with the court, you file your Motion to Compel Arbitration.

Draft and file an Answer to your debt lawsuit.

Does the court always grant the motion?

Once you submit your Motion to Compel Arbitration, there’s no guarantee the court will grant it. If the lawsuit has to deal with an “arbitrable issue” as outlined in your contract with the creditor, the court must grant the motion. If it is a non-arbitrable issue, the court will deny the motion. To better understand how this works, let’s consider an example.

Example: Robert’s credit card company is suing him for a $20,000 debt. He checks the contract with the credit card company. It lists debt collection efforts as an arbitrable issue. It also says the credit card company assumes all arbitration costs. Robert thinks he has a good chance of winning, so he uses SoloSuit to make a Motion to Compel Arbitration. Because collection is an arbitrable issue, the court grants his motion.


Have you been sued for a debt? Do you want to force arbitration? Get started with SoloSuit’s Motion to Compel Arbitration right now.

What happens in an arbitration hearing?

The arbitration process itself works a lot like a lawsuit — except an arbitrator makes the decisions instead of a judge. Here’s what you can expect:

  • Both you and the creditor can explain your side of the issue.
  • You have a chance to show documents that help your case.
  • In most cases, you can present witnesses.
  • The arbitrator weighs the evidence and comes to a decision.

How formal the process is will depend on the individual arbitrator. Some prefer arbitration hearings to be as close to a courtroom setting as possible, and others prefer a more relaxed approach.

What happens if you lose in arbitration proceedings?

Before filing a motion, you should understand what happens if you lose in an arbitration proceeding. Losing in arbitration is a lot like losing in a lawsuit.

With a binding arbitration award, the final arbitration decision is entered as a judgment, meaning your wages can be garnished, or money can be taken from your bank account to pay the debt. Some creditor arbitration clauses also require you to pay arbitration costs if you lose, so make sure you read your agreement carefully!

SoloSuit is here for you

Dealing with creditors can feel lonely, but SoloSuit is on your side. We can help you move toward freedom from debt without having to pay expensive attorneys’ fees. And if you’re looking for guidance along the way, check out our helpful articles and videos. You can do this!

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FAQs about what happens in arbitration

What role does a court reporter play in an arbitration?

In some arbitration proceedings, a court reporter may be present to take notes of the hearing.

When in an arbitration process would potential witnesses be sworn in?

Potential witnesses may be sworn in during an arbitration process at the beginning of the proceeding. In most cases, the two parties who are in dispute will also be sworn in.

Can there be any closing remarks in an arbitration hearing?

Yes, at the end of most arbitration hearings, the arbitrator will ask both parties for last words. It's during this point that you can add your closing remarks, reemphasizing the evidence and your side of the case.

When can one expect to receive the arbitrator's decision?

It usually takes around 30-90 days for the arbitrator to make a decision. You should receive notice of the arbitrator's decision some time during this time frame.

Can you appeal the decision of the arbitrator if it is not in your favor?

You can appeal the decision of the arbitrator only if you and the opposing partied agreed that an appeal was allowed before the arbitration proceeding began.

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