Is mandatory arbitration worse than a judgment and how to respond??

[ILresident06]

Last year my fiance received a letter from a lawyer in Colorado acting on behalf of CACV trying to collect debt of $13,000+ from an MBNA credit account. FI didn't recall what the debt was for but it was listed on his CRs as a previously joint account w/ a former girlfriend. (After they broke up, he moved out of state and would send her payments to cover their joint bills, which she was supposed to pay but allegedly did not).

After we received the collection letter, we sent a DV but never got a response. Several months ago they tried to deliver a signature required package but we refused it and it was sent back.

Well, this morning someone came knocking on the door, and served him with an arbitration claim form, and says he has 30 days to respond to claimant and to National Arbitration Forum (NAF).

I just scoured the web and found some pretty scary articles about how NAF is very biased towards credit companies.

I'm really not sure what he needs to do now to approach this? Should he just send a copy of the arbitration refusal letter http://whychat.5u.com/arbltr.html to both NAF and the CA? or should he request a hearing? Will just sending the refusal letter and not directly challenging the claim hurt him later?

Should all of this be done through a lawyer? My employer has a group legal plan, which covers debt collection but for some reason not arbitration (even if it's related to DC).

The more I read about MA, the more stressed I am. It sounds like there have been a handful of successful suits in some states, but are we really going to have to go as far as litigating to get past all of this?

[ILresident06]

Also, would there be any point in him just trying to settle the debt w/ them at this point (not a first choice option, but possibly better than what NAF might decide)?

[merrybucks]

Read the Master Refusal of Arbitration Thread. The NAF is just a rubber stamp for the CC industry.

[ILresident06]

Read the Master Refusal of Arbitration Thread. The NAF is just a rubber stamp for the CC industry.

Thanks for responding. Yes, I did read through that thread, which is where I found a link to the refusal letter, but I couldn't quite gather if the refusal letter is actually all that effective or not?

Also, if we DO send a refusal letter and they don't respond to that, will the NAF still make a decision since we refused to send a formal response w/in the 30 day time period?

At this point, I'm kind of considering the possibility of just offering a settlement through a lawyer so we can put this thing to rest?

[admin]

If a company does win mandatory arbitration, they still need to turn it into a judgment, and at this point you may be able to halt the process.

[ILresident06]

If a company does win mandatory arbitration, they still need to turn it into a judgment, and at this point you may be able to halt the process.

Halt the process by sending the refusal letter, is that correct?

Also, in the above mentioned thread, I think I read someone advise that we should go to our local court and ask for an order declaring no arbitration agreement b/t the parties or a motion to deny arbitration award...Is that something we should do BEFORE sending the refusal letter?

Also, do we anything to hold over them by the fact that they ignored our DV letter and continued collection activities?

[admin]

No, what I meant is that you would treat the case as any other lawsuit brought by a JDB. An arbitration win needs to be turned into a court judgment before accounts can be seized, garnishment, etc.

When they take the arbitration win to court, you can file an objection, motion to dismiss or any other avenue permitted by court procedure.

Meanwhile, if your case is still in arbitration, keep fighting on that front. Just know that a win on their side is not the end of the matter for you.

Sorry if I confused you.

[ILresident06]

No, what I meant is that you would treat the case as any other lawsuit brought by a JDB. An arbitration win needs to be turned into a court judgment before accounts can be seized, garnishment, etc.

When they take the arbitration win to court, you can file an objection, motion to dismiss or any other avenue permitted by court procedure.

Meanwhile, if your case is still in arbitration, keep fighting on that front. Just know that a win on their side is not the end of the matter for you.

Sorry if I confused you.

Ah, ok. Well, I guess that's good to know if it gets to that point (which is what I expect given all I've heard about NAF).

I guess my main concern is what we should do now to begin the fight? Do we

- Send a letter saying we refuse to arbitrate?

- Respond to the arbitration form as requested and send our response to NAF and the claimant?

- Request a hearing (can this be done in conjunction w/ the arbitration response)?

- Throw in the towel and see if they'll settle? I just don't know how long we should keep dragging this out for. (Although IL's open accounts SOL is 5 years, I've heard that the state considers credit card accounts as "written contracts" which have a 10 yr SOL!) I'm also assuming that given the current economic conditions right now, we might have a better chance of getting them to accept a lower offer if paid upfront?

[admin]

- Send a letter saying we refuse to arbitrate?

Yes, even though you should still respond per the NAF guidelines. This can be part of your response.

- Respond to the arbitration form as requested and send our response to NAF and the claimant?

Yes

- Request a hearing (can this be done in conjunction w/ the arbitration response)?

Not sure what you mean

- Throw in the towel and see if they'll settle? I just don't know how long we should keep dragging this out for. (Although IL's open accounts SOL is 5 years, I've heard that the state considers credit card accounts as "written contracts" which have a 10 yr SOL!) I'm also assuming that given the current economic conditions right now, we might have a better chance of getting them to accept a lower offer if paid upfront?

Never an option. Fight!

[ILresident06]

Yes, even though you should still respond per the NAF guidelines. This can be part of your response.

Yes

Not sure what you mean

Never an option. Fight!

The claim form instructions says that we have the option to select a document hearing or a participatory hearing and that it can be requested in our official response or in a separate writing.

I talked to a lawyer this morning who said he's heard about NAF's questionable reputation and agrees that it's usually a lost case for the consumer. He also said that if they get a judgment later on that the courts almost always side w/ the arbitrator

His recommendation was to probably try to settle and also try to get them on violating the FDCPA when they didn't respond to our debt validation letter.

Sigh....I dunno. Would it really be the end of the world if we tried to settle? We're getting married early next year and it'd be nice to start our lives w/ a relative clean slate. I just don't know that I want this debt to continually dog him forever...

[Templar]

$13k is a chunk of cash to pay out on something you’re not certain about. I also doubt paying the 13k will give you and your SO a clean slate.

I know something about the MBNA-CACV-NAF scam. It took me two court appearances and four-years to have their bogus claims squashed. Most likely this claim is bogus. It appears MBNA sold a bunch of ID’s prior to merging with BoA claiming the folks defaulted on CC loans.

You are really dealing with Collect America now on a collection effort under the disguise of arbitration. NAF will give a decision against you and your SO. The arbitration award will be turned into a judgment and then sold to another JDB. Collect America-CACV is depending upon a default judgment on the arbitration award.

You need an attorney now, especially with $13k on the line. There are defenses, but you need a trained legal professional at this point. NO doubt the arbitration procedure has been, or will be corrupted. The corrupted arbitration process is your defense. Some lawyers prefer to fight the scam at the beginning; others wait for the arbitration to be entered for a judgment in Court. Both ways work.

Be patient. Be smart. Don’t waiver.

[montanatim]

My suggestion, Go back to this lawyer and see if he will file an injunction for a stay on the arbitration proceedings with your local court. Citing no arbitration agreement, your thrust is two fold here.

You claim no agreement to arbitrate because there is none, now if they do produce the agreement(unlikely) then you challenge this new company's right to enforce it, by questioning their chain of title. This should be beatable with simple contract law, if they cannot produce a valid contract, or clear clean chain of title.

If you do not have a copy of NAF's rules of procedure and intend to play their game at all, I strongly urge you to go to their web site and down load a copy.

It is very convoluted and intentionally hard to understand. But if you miss the least little tittle in your game with them, they will spank you with an award for the other side, any excuse will do for them.

[ILresident06]

$13k is a chunk of cash to pay out on something you’re not certain about. I also doubt paying the 13k will give you and your SO a clean slate.

So even if we settled w/ them (for a lesser amount), you don't think that would close the case on this debt? The lawyer I spoke with said that as long as the proper paperwork is filed if/when we settle, if they or another JDB come back and try to collect on this later we have proof that it has been paid and that should be the end of it, right?

I know something about the MBNA-CACV-NAF scam. It took me two court appearances and four-years to have their bogus claims squashed. Most likely this claim is bogus. It appears MBNA sold a bunch of ID’s prior to merging with BoA claiming the folks defaulted on CC loans.

You are really dealing with Collect America now on a collection effort under the disguise of arbitration. NAF will give a decision against you and your SO. The arbitration award will be turned into a judgment and then sold to another JDB. Collect America-CACV is depending upon a default judgment on the arbitration award.

You need an attorney now, especially with $13k on the line. There are defenses, but you need a trained legal professional at this point. NO doubt the arbitration procedure has been, or will be corrupted. The corrupted arbitration process is your defense. Some lawyers prefer to fight the scam at the beginning; others wait for the arbitration to be entered for a judgment in Court. Both ways work.

This is what I'm afraid of, though. From everything I've read and what the lawyer said, all seem to point that no matter what, NAF will probably rule against us and if we don't pay up and the CA files a judgment, the courts w/ very few exceptions almost always rule in favor of the arbitration decision.

This is mostly why I'm wondering if we should try to settle now? That way we could maybe get a deal to pay a lot less than the $15k+ plus NAF fees that we'd be sacked w/ when they win the arbitration.

There is the possibility that maybe he was responsible for the debt (although b/c of his situation w/ his ex, who does not return his calls, he doesn't have any records to help jog his memory).

We do have consultations w/ a couple lawyers set up for this week (luckily I've signed up for my company's group legal plan so most of our fees would be covered). However, I've also been told that in Illinois, it's very rare that CA's choose to exercise mandatory arbitration and most just go to court, where chances are better for the consumer. So I'm not even sure how familiar the lawyers would be navigating this process

Be patient. Be smart. Don’t waiver.

[ILresident06]

My suggestion, Go back to this lawyer and see if he will file an injunction for a stay on the arbitration proceedings with your local court. Citing no arbitration agreement, your thrust is two fold here.

You claim no agreement to arbitrate because there is none, now if they do produce the agreement(unlikely) then you challenge this new company's right to enforce it, by questioning their chain of title. This should be beatable with simple contract law, if they cannot produce a valid contract, or clear clean chain of title.

If you do not have a copy of NAF's rules of procedure and intend to play their game at all, I strongly urge you to go to their web site and down load a copy.

It is very convoluted and intentionally hard to understand. But if you miss the least little tittle in your game with them, they will spank you with an award for the other side, any excuse will do for them.

Thanks for your input. I did download the NAF's "Code" yesterday and tried to make my way through it, but was only able to get about half way before my brain started to hurt

Do you think it makes any difference that their lawyer is based in Colorado? Can they really file arbitration from there when we live in IL? Not to mention their arbitration claims cite Delaware law....and SO lived in Florida when he allegedly opened this account, so I feel like we're all over the board here. I can't even figure out for sure which state's SOL applies to us in this case (if Delaware or Florida, we may be in the clear based on expired SOL).

[ILresident06]

My suggestion, Go back to this lawyer and see if he will file an injunction for a stay on the arbitration proceedings with your local court. Citing no arbitration agreement, your thrust is two fold here.

You claim no agreement to arbitrate because there is none, now if they do produce the agreement(unlikely) then you challenge this new company's right to enforce it, by questioning their chain of title. This should be beatable with simple contract law, if they cannot produce a valid contract, or clear clean chain of title.

Update - I asked the lawyer about filing an injunction and he said that in order to do so, we would have to have a good-faith basis for doing so and based on our situation, he didn't think we'd have any ground for filing.

[Templar]

You need to do what you feel comfortable doing. However, what your lawyer is suggesting and advising is at odds what I have seen and heard from judges and attorneys in NYS. It would behoove you to get a 2nd legal opinion.

It disturbs me an attorney would advise settling for $13k under such vague and hazy conditions I suspect you've been handed. Many times there's a real question as to who's really the interested party making the claim. Are you a troll?

These characters you're dealing with have a very bad reputation in the legal and courts circles in this state. It's my observation the instant light is thrown on their claims in a court of record, there's a puff of smoke as these organizations disappear...and they stiff the local lawyer hired to represent their motion for a judgment on the arbitration award for their fee.

Good luck.

[ILresident06]

You need to do what you feel comfortable doing. However, what your lawyer is suggesting and advising is at odds what I have seen and heard from judges and attorneys in NYS. It would behoove you to get a 2nd legal opinion.

It disturbs me an attorney would advise settling for $13k under such vague and hazy conditions I suspect you've been handed. Many times there's a real question as to who's really the interested party making the claim. Are you a troll?

These characters you're dealing with have a very bad reputation in the legal and courts circles in this state. It's my observation the instant light is thrown on their claims in a court of record, there's a puff of smoke as these organizations disappear...and they stiff the local lawyer hired to represent their motion for a judgment on the arbitration award for their fee.

Good luck.

Actually, to clarify, the lawyer didn't suggest that we settle at $13k. He said he wouldn't start any higher than 30-35% of what they say is owed (original debt was about $10k+$5k in interest+lawyers fees). Although he thought that they may not accept anything lower than 75 or maybe 50 percent.

I will definitely plan to pursue the injunction question when I meet up two other lawyers this week for a consultation and see what they think.

I'm going to sit down w/ FI tonight and see if he can wrack his brains and try to remember anything he can about this account and whether he really did open it w/ his ex. But it was so long ago and they had a couple joint accounts they opened together that it's hard to say. I don't think he even has any of this old statements.

Also, I just noticed that the arbitration form claims the last payment made on the account was 10/29/04. His credit report shows that it was closed "by consumer" on 11/04 and then charged off on 12/04 to CACV.

Does it make sense that if a payment was made on 10/04 that 1) they would have allowed the account to be closed by consumer if a balance remained and 2) it would've been charged off not even 2 months later?

[M&M]

I may be wrong, but if you settle I believe the debt will stay on your BF's CR for up to 7 years anyway. Someone smarter about these things can answer this better than I can I'm sure...

[ILresident06]

I may be wrong, but if you settle I believe the debt will stay on your BF's CR for up to 7 years anyway. Someone smarter about these things can answer this better than I can I'm sure...

I've been wondering if settling would extend the CR listing for another 7 years or if it wouldn't change how long it's on the report at all. (Unlike for SOL, where a payment re-ages the debt).

If it doesn't re-age how long it's on his CR, then that's not really a big concern as it's due to fall off in 2011.

My main concern is just being continually harassed about this debt for who knows how long and not being sure what our best recourse is (short of paying up and having a settlement letter to prove it).

[ILresident06]

Another update:

Talked to another lawyer and he said while they could try to assist us w/ the arbitration (although he admits that they haven't had much experience w/ NAF arbitrations), he also thought that the most prudent course might be to try to settle

Regarding the injunction, his response was "I'm not sure what the basis for the injunction would be since your fiance may well have had the card, and the card almost certainly contained an arbitration agreement."

So the CA doesn't have to show any kind of PROOF that FI signed the agreement?? They can just say that it's him and win based on that?? Whatever happened to innocent until proven guilty??

[M&M]

Have you asked for validation of this alleged debt from them? You have the right to review things like alleged statements, what name is on account, signed contract etc. Perhaps this will help to see if this really is your FI account or not.

[montanatim]

I can almost understand why these attorneys are waffling on the injunction being officers of the court and all, BUT, I still think that is the thing to try.

Even if the lawyers are uncomfortable about challenging the existence of the agreement, the challenging of the chain of title for right of action should be a solid one. That also happens to be the weakest part of any debt collectors case 99 out of 100 times.

Maybe these people aren't familiar enough with consumer law, maybe they don't feel it would net them enough money, I gotta wonder anyway.

The best NAF arbitration for any consumer is the one that doesn't happen. If you cannot find a NACA attorney to help you, you could consider filing it yourself.

If there is a choice of law in the contract that no one seems to have a copy of, that calls for Delaware law, that SOL should apply. What if they don't actually have the contract? Most credit cards do not have a contract per say, one applies, (the application not being a contract with terms spelled out) then the card arrives and the terms are spelled out and they say you agree to them if you use the card. I would argue (and MT law holds) that a signed application is not a contract. Your state law may be different. In my scenario your state SOL would apply.

NAF's rules supposedly support SOL defense in rule 10A. You can also challenge chain of title in rule 11E, your opponent is supposed to have filed an affidavit with the forum, to challenge this you file a rule 18 request.

Here's the fun part, rule 35C says that the arbitrator is not bound by any rules of evidence. So there affidavit could be a note scrawled on a cocktail napkin in crayon that says " We own this debt" and it's all good to the NAF.

You want to kick scream and holler and or point guns and stop this before it goes to their kangaroo court. If no attorney will help, I think it is well worth the effort to go it alone if need be.

Most courts have ruled that the arbitrator cannot decide if a valid arbitration agreement exists between the party's. There fore the court is the place for this to be hashed out. The one case I have in front of me is (of course) from the MT Supreme Court #2008 MT 175. Perhaps this will be useful info for your attorney, perhaps not.

[ILresident06]

Have you asked for validation of this alleged debt from them? You have the right to review things like alleged statements, what name is on account, signed contract etc. Perhaps this will help to see if this really is your FI account or not.

Yes, after they sent their initial collection letter last July we sent a DV letter CMRR. After awhile I realized I never got the receipt back. I reported it to the post office and they were supposed to look into it but they never got back to me, and then I admit I sort of let it go to the back of my mind. So although I have the receipt that I mailed it CMRR, I unfortunately don't have proof they received it. Interestingly enough, the post office told me it's very rare that a RR is not mailed back and the only explanation they could give is maybe it fell off. The only thing I could gather from their records is when it was accepted for mailing.

[ILresident06]

I can almost understand why these attorneys are waffling on the injunction being officers of the court and all, BUT, I still think that is the thing to try.

Even if the lawyers are uncomfortable about challenging the existence of the agreement, the challenging of the chain of title for right of action should be a solid one. That also happens to be the weakest part of any debt collectors case 99 out of 100 times.

By this do you mean challenging that CACV actually acquired rights to the debt from MBNA?

Maybe these people aren't familiar enough with consumer law, maybe they don't feel it would net them enough money, I gotta wonder anyway.

The best NAF arbitration for any consumer is the one that doesn't happen. If you cannot find a NACA attorney to help you, you could consider filing it yourself.

The funny thing is, both of these guys ARE NACA attornyes

Supposing we do file the injunction ourselves...is it likely we'd know the results before the 30 day period is up for the arbitration response? Should we still plan to respond to that at the same time?

If there is a choice of law in the contract that no one seems to have a copy of, that calls for Delaware law, that SOL should apply. What if they don't actually have the contract? Most credit cards do not have a contract per say, one applies, (the application not being a contract with terms spelled out) then the card arrives and the terms are spelled out and they say you agree to them if you use the card. I would argue (and MT law holds) that a signed application is not a contract. Your state law may be different. In my scenario your state SOL would apply.

In the arbitration documents, they did copy the part about MBNA's mandatory arbitration (no signature included of course). It says that unless we are bound by arbitration unless we specifically opted out, in which case any court cases would be tried in the state of Delaware. Of course, it didn't say about which state's laws would apply for the arbitration. By DE law, the SOL would have expired. By IL or FL law, though, I think we'd still have a year to go

Btw, the forms they sent us weren't even originals. They were just faxed copies and some of it was too blurred to read AND there was a page missing. I don't know if that would entitle us to any breaks...Maybe at the very least a delay of the 30 day time limit in order for them to send a legible copy?

NAF's rules supposedly support SOL defense in rule 10A. You can also challenge chain of title in rule 11E, your opponent is supposed to have filed an affidavit with the forum, to challenge this you file rule 18 request.

Would filling a request for something count as part of our response? Or would that be a separate action? I also noticed that you can file a request for discovery. Is that the equivalent of us asking to see what evidence they've provided? (Also, I love that every request apparently has an NAF FEE attached to it...)

Here's the fun part, rule 35C says that the arbitrator is not bound by any rules of evidence. So there affidavit could be a note scrawled on a cocktail napkin in crayon that says " We own this debt" and it's all good to the NAF.

You want to kick scream and holler and or point guns and stop this before it goes to their kangaroo court. If no attorney will help, I think it is well worth the effort to go it alone if need be.

Most courts have ruled that the arbitrator cannot decide if a valid arbitration agreement exists between the party's. There fore the court is the place for this to be hashed out. The one case I have in front of me is (of course) from the MT Supreme Court #2008 MT 175. Perhaps this will be useful info for your attorney, perhaps not.

Wow, you seem to be really familiar with NAF arbitrations! One of the attorneys we have a consultation with (who's part of the group legal plan) didn't even seem to be aware of what NAF is...(not surprisingly he's not at the top of our list).

Another thing I've been wondering....since this was allegedly a JOINT account, do the CA's usually try to hit up both account holders? In which case, what happens if one person responds and the other just ignores the claim? FI's ex is not the most responsible person so I'm betting she probably won't do anything. Would that affect (help) our case at all? I know w/ a joint account, both are held equally responsible. But how does an arbitrator then decide who would pay how much of the award? Or does it not matter? It wouldn't seem right though, if they granted awards from both parties in the same amount as the total debt...then the CA would be getting DOUBLE the debt owed.

[astiman]

Have you contacted Lance Raphael, Atty out of Chicago?

He is VERY good at consumer law.....