Cabinboy

Initiate Arb to stop impending petition filed small claims

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Received Right to Cure November 14th, 2018 from Gurstel Law Firm for their client Discover.  They have until July 9th to file a petition for the 5 year SOL in Iowa.  We feel that since Delaware is their choice of law state they would have a little better chance of getting Delaware's 3 year SOL through card member agreement governing body through an arbitrator.  The amount they are going to sue for is under $6,500.00 which is the threshold for being considered small claims court.  The Discover Card member agreement states that Discover doesn't have to choose arbitration in small claims court.  So it's an easy decision to go forward with initiating AAA Arbitration now before they file in small claims.  That way a MTC Arbitration can be filed n answer once Discover through Gurstel Law Firm files along with proof of initiating arbitration.  They will pay for the fees if no monies are available if asked in writing according to card member agreement.  Knowing how aggressive Discover is an OC, a settlement for a smaller amount is the end goal.  They are at 80% right now, even though they know there are no assets at this time to attach to and no wages to garnish.  I understand they seek judgments for possible future defendant enrichment.   

Questions:

Are there any problems with doing the above this way?    

Can that request that Discover pay the fee be mailed with Discover's copy of the arbitration agreement to Gurstel Law Firm?   

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It may or may not work.  

I did something similar with Discover in JAMS and I was very happy with my settlement.  

Make sure you file before they file in court.  If they file in court, you may have a harder time with the Delaware SOL.  

 

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I see 3 problems:

1.  The Discover card agreement does not have any exemption for small claims, so there is no need to file arbitraion before being sued.

2.  Discover being an OC will not ignore your arbitration demand and sue you anyway, so as soon as you file you will have started the case.

3. I would use JAMS over AAA.  AAA cost less and does not have an automatic Discovery phase and they are less likely to grant an in-person hearing and are more likely to speed the case through for a much cheaper amount.

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4 minutes ago, fisthardcheese said:

I see 3 problems:

1.  The Discover card agreement does not have any exemption for small claims, so there is no need to file arbitraion before being sued.

2.  Discover being an OC will not ignore your arbitration demand and sue you anyway, so as soon as you file you will have started the case.

3. I would use JAMS over AAA.  AAA cost less and does not have an automatic Discovery phase and they are less likely to grant an in-person hearing and are more likely to speed the case through for a much cheaper amount.

I agree completely with #3.   100% agree. 

However, this is one of the rare cases in which filing before being sued may work to the debtor’s advantage.  

The Discover arbitration agreement says all claims must be done under Delaware law.  Discover is then put in the dilemma of saying Delaware law doesn’t apply in this case, while their agreement says it does.  

I had that, plus a few counterclaims, with Discover a few years back.  Finally, between the time they got the initial bill for the hearing and when they paid the bill, they accepted the same settlement offer they had rejected earlier.  

As I said, I had some counter claims so I probably got a better settlement than the OP could. 

It appeared to me that Discover wasn’t thrilled at the prospect of arguing in arbitration that the choice of law in their agreement didn’t apply. 

YMMV.  Every case is different. 

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Just now, BackFromTheDebt said:

I agree completely with #3.   100% agree. 

However, this is one of the rare cases in which filing before being sued may work to the debtor’s advantage.  

The Discover arbitration agreement says all claims must be done under Delaware law.  Discover is then put in the dilemma of saying Delaware law doesn’t apply in this case, while their agreement says it does.  

I had that, plus a few counterclaims, with Discover a few years back.  Finally, between the time they got the initial bill for the hearing and when they paid the bill, they accepted the same settlement offer they had rejected earlier.  

As I said, I had some counter claims so I probably got a better settlement than the OP could. 

It appeared to me that Discover wasn’t thrilled at the prospect of arguing in arbitration that the choice of law in their agreement didn’t apply. 

YMMV.  Every case is different. 

If you have at least one claim you can file against Discover and know that a lawsuit is pending (via collection letters from an attorney's office), then I would agree with you on trying it in order to get the DE SOL.  That is a good point.  It's a pretty good shot to take in hopes that the arbitrator considers their counter claim for the debt as beyond SOL under DE.

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Need to check (ICCC) Iowa Consumer Credit Code and the IDCPA Iowa Debt Collections Practices Act to see if a violation that could be included in arbitration, while arbitrator decision regarding SOL for DE is considered?  I know that sometimes under those authorities violations may be applied to both OC and debt collectors, including law firms. (Although suing  a law firm would have to be a separate case). 

One advantage I see with AAA over JAMS was the reallocation of fees and expenses if a debtor loses.  

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On 5/16/2019 at 11:59 PM, Cabinboy said:

One advantage I see with AAA over JAMS was the reallocation of fees and expenses if a debtor loses. 

They are both technically supposed to prevent sticking the consumer with fees, it is just that AAA has a better worded rule on it while JAMS is worded in such a way that one arbitrator decided he was allowed to add fees. However, if the lottery had those kind of odds, no one would hesitate to buy a daily ticket for their virtually guaranteed win.

But you are dealing with an OC and AAA is far cheaper and will rush to push the case through without discovery and possibly just a paper submission and no hearing.  I would never want to take that risk with an OC.  If it were me, I'm using JAMS every time it's in my contract.

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Thank you very much.  JAMS language is ambiguous in rules section..  

 I counted 52 days until this is out of the 5 year SOL.  If Arbitration is initiated next week before a petition is filed in court, will that keep Discover in the Arbitration process until that SOL passes? 

If Arbitration is done too soon it would backfire if Arbitration was cancelled for Discover non-participation before the 5 year SOL date and then they turned around and filed petition in small claims court.  

Since this is the first time initiating arbitration not sure of the timeline involved with the process. 

Looking to go the 3 year SOL DE route, but it would be a stronger stance if it got it to the 5 year SOL as allowed by state statute.     

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It doesn't work like that.  The day they file their counterclaim in arbitration is the day counted for SOL.  Their claims will have been filed within the SOL even if the time expires during the process.

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4 hours ago, DebtSettlementJourney said:

FYI I settled with Discover for 40% on one account, and a little higher than that on a Gurstel account (Amex)

Was the Discover for 40% settled with a collector or a law firm.  I have seen a pattern where debt is settled from 30 - 40% with a collector for Discover and the Law Firm's such as Gurstel are 40 - 50%.

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18 hours ago, Cabinboy said:

Was the Discover for 40% settled with a collector or a law firm.  I have seen a pattern where debt is settled from 30 - 40% with a collector for Discover and the Law Firm's such as Gurstel are 40 - 50%.

Straight with Discover. They were at the stage where they were threatening to send it to legal. The 40% was also a 'payment plan'. I paid like 60% of it up front and the rest is over equal payments over the next 23 months. 

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Count is 34  days until this is out of the 5 year SOL.  Got JAMS paperwork completed and it just needs to be dated and mailed when time seems right.

Have violations with the IDCPA and Iowa Consumer Credit Code for the attorney Gurstel Law Firm and Discover Financial.  ICCC allows for suit against both OC and collectors.  No itemization of late payments of charges to be included along with right to cure as required by Iowa Code 537.5111(1).

Probably won't reveal SOL on initial Arb demand but can revise demand up to the picking of the arbitrator, which is a choice among 5 so should have an idea about what time they will pick out arbitrator and then I can add SOL to the updated Arb demand after SOL plays out and before they counter sue.  

Still looking to do the 3 year SOL DE route, but it would be a stronger stance if it got it to the 5 year SOL as allowed by Iowa. 

Looking to call Discover attorney a couple of days before sending in Arb Demand for 1 last chance of a settlement.  They were at 80% when last spoken to in February.  Had settled a personal loan with them the month before for 30% but that was through a debt collector (RADIUS Global Solutions LLC) working on their behalf, not a law firm.

Since this is the first time in Arb not sure it will go smoothly as noted here since it is Discover.

Is this wishful thinking or is there an outside chance it would work?  

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On 5/22/2019 at 4:04 PM, Cabinboy said:

Looking to call Discover attorney a couple of days before sending in Arb Demand for 1 last chance of a settlement.

Calls usually don't work as well.  In the past, I would send a copy of the JAMS Demand paperwork with a letter (certified mail) asking for settlement and giving them a deadline. If they don't settle or contact me by the deadline, I send in the JAMS paperwork (and no need to send them another copy since it was already served before you filed).

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On 5/23/2019 at 5:24 PM, fisthardcheese said:

Calls usually don't work as well.  In the past, I would send a copy of the JAMS Demand paperwork with a letter (certified mail) asking for settlement and giving them a deadline. If they don't settle or contact me by the deadline, I send in the JAMS paperwork (and no need to send them another copy since it was already served before you filed).

May have done self-inflicted shot into Iowa 5 year SOL.  Last payment where delinquency started was June 26, 2014.  Account was closed and charged off on 2/27/2015.  Went with Debt Settlement Co. National Debt Relief to work out payment schedule for 4 defaulted accounts and who made 6 payments to Discover totaling $3,325.00.starting April 30, 2015 through last payment being September 30, 2015. I believe in Iowa you have to have a written and wet ink signed contract for payments on a closed account to restart SOL. However, the payments from National Debt Relief may have re-started SOL over to September 30, 2015 which was last payment even though it came from a 3rd party, not defendant.

In Iowa, you have to have a written agreement with a wet signature to agree to restart payments, but I think the act of making payments again and of itself may restart the SOL clock.  The last statement from Discover that they had in the packet I requested in January was March, 2016.  

Has anyone gone through this and what was the outcome? 

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