the_seeker202

Planning Arbitration against Original Creditor

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Hello, 

I am planning on starting the process of requesting arbitration against a lawyer who is representing an original creditor that I owe. Ultimately, I am working extra hour to save enough money for the retainer fee I need to file bankruptcy. However, I am trying to prevent a garnishment from being awarded while I do so. They sent off a demand letter in February and I sent back a validation request within the 30 day time frame requesting the original agreement. I have the original agreement but it has a "Matters not covered by Arbitration" clause. Overall it reads, "I agree that Lender does not have to initiate arbitration before exercising lawful self-help remedies or judicial remedies of garnishment, repossession, replevin, or foreclosure, but instead may proceed in court for those judicial or damages I may have arising out of, relating to, or in connecting with Lender's exercise of those remedies must be arbitrated. Instead o pursuing arbitration, either Lender or I also have the option to bring a lawsuit in court to seek to recover the monetary jurisdictional limit of a small claims or equivalent court in my state including costs and attorney's fees. Provide that no relief other than such recovery is requested in such lawsuit, an Excluded claims lawsuit. If an excluded damages lawsuit is filed, the other party cannot require that the claims in that lawsuit be arbitrated. 

 

So I am hoping to start the process with a bankruptcy lawyer in April. However, my question is that, with this clause, would that prohibit me from requesting arbitration from the original creditor, in this case is One Main Financial. I have a plan of sending off a letter on Monday to dispute the balance and to request arbitration, but this clause seems to interpret that I may not have the option. 

 

A second pair of eyes would be helpful and I included the full copy in the link below. 

https://www.icloud.com/iclouddrive/0nlkxh0lJ7lIHmL2ZajwG2A4Q#DESCRIPTION_OF_ARBITRATION%2C_Arbitration_is_a_method_of_resolving_claims_and_disputes_between_parties

DESCRIPTION OF ARBITRATION, Arbitration is a method of resolving claims and disputes between parties.pdf

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On 3/13/2021 at 5:16 PM, the_seeker202 said:

Hello, 

I am planning on starting the process of requesting arbitration against a lawyer who is representing an original creditor that I owe. Ultimately, I am working extra hour to save enough money for the retainer fee I need to file bankruptcy. However, I am trying to prevent a garnishment from being awarded while I do so. They sent off a demand letter in February and I sent back a validation request within the 30 day time frame requesting the original agreement. I have the original agreement but it has a "Matters not covered by Arbitration" clause. Overall it reads, "I agree that Lender does not have to initiate arbitration before exercising lawful self-help remedies or judicial remedies of garnishment, repossession, replevin, or foreclosure, but instead may proceed in court for those judicial or damages I may have arising out of, relating to, or in connecting with Lender's exercise of those remedies must be arbitrated. Instead o pursuing arbitration, either Lender or I also have the option to bring a lawsuit in court to seek to recover the monetary jurisdictional limit of a small claims or equivalent court in my state including costs and attorney's fees. Provide that no relief other than such recovery is requested in such lawsuit, an Excluded claims lawsuit. If an excluded damages lawsuit is filed, the other party cannot require that the claims in that lawsuit be arbitrated. 

 

So I am hoping to start the process with a bankruptcy lawyer in April. However, my question is that, with this clause, would that prohibit me from requesting arbitration from the original creditor, in this case is One Main Financial. I have a plan of sending off a letter on Monday to dispute the balance and to request arbitration, but this clause seems to interpret that I may not have the option. 

 

A second pair of eyes would be helpful and I included the full copy in the link below. 

https://www.icloud.com/iclouddrive/0nlkxh0lJ7lIHmL2ZajwG2A4Q#DESCRIPTION_OF_ARBITRATION%2C_Arbitration_is_a_method_of_resolving_claims_and_disputes_between_parties

DESCRIPTION OF ARBITRATION, Arbitration is a method of resolving claims and disputes between parties.pdf 1.09 MB · 1 download

@fisthardcheese@BV80?

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28 minutes ago, admin said:

The OP says he is hoping to start the bk process.  I honestly cannot tell if the agreement would prohibit arbitration when bk is being pursued or not.  The problem I do see is if a creditor pays arbitration fees, then the debt is extinguished in bk.  I’m not sure if that could be considered filing an arbitration claim in bad faith.

The OP needs to contact a bk attorney immediately.  Hopefully, @fisthardcheesewill reply soon.

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Is this loan an unsecured debt (no assets back it up) or a secured debt (a debt that is backed by an asset). If it is an unsecured debt and you plan to start the BK process in April, then I would not even both starting arbitration because even if they started a lawsuit today, you would have 20 days to answer which in and of itself gets you into April and if you file an answer with a remotely trialable issue, it will take even longer to get into court. There is no self-help recourse for unsecured debt and so they would have to go to court and get a judgement before they can do any action such as levy or garnishment. This means that you will probably have started the BK process before they can grab anything assuming you really get the BK process started in April.

Now, if the debt is a secured debt, they might be allowed to take the property without going to court and getting a judgement, assuming they can do so peaceably.

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1 hour ago, BV80 said:

The OP says he is hoping to start the bk process.  I honestly cannot tell if the agreement would prohibit arbitration when bk is being pursued or not.  The problem I do see is if a creditor pays arbitration fees, then the debt is extinguished in bk.  I’m not sure if that could be considered filing an arbitration claim in bad faith.

The OP needs to contact a bk attorney immediately.  Hopefully, @fisthardcheesewill reply soon.

As far as this goes, it depends on a lot of things. 
 

In the old days, I was six figures in debt.  I used a very aggressive strategy of arbitration and chasing violations of FDCPA etc and catching companies that didn’t keep good records.  These days they all keep good records, violations are much rarer and arbitration is rarer. 
 

By the time the smoke cleared my debts were at a much more manageable level and I eventually got above water.  So no BK. 
 

If something like this is the OP’s strategy, there is nothing unethical about going into arbitration   
 

If the OP is going to declare BK no matter what, then absolutely consult a BK attorney before arbitration.  

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Hello Everyone! 

Thank you so very much for your responses. It has been very helpful thus far. 

 

I am experiencing a similar situation where all of my creditors have valid documents when I did the debt validation, so I do not see an issue with them getting a judgement if they were to file a suit. 

 

Luckily for me, a lawsuit has not been filed yet. I'm just getting letters from attorney's about how serious they are about suiting me. 

I am planning on reaching out to a BK attorney today. I tried for the last two years to pay off the debt, unfortunately my category 1 expenses have increased so much. Bascially my mortgage, food, utilities and my parents have recently had issues with their employment, so I have been helping them with their rent. Not much money left to try and pay off my debt. 

The debt I am trying to clear are all unsecured debt, so I am not worried about any of my possessions being taken from me. Even my home is upside down,  which is a good thing given the circumstances. 

I should have the money to pay for a BK attorney's fees in two weeks, which should hopefully get things moving in the right direction. 

 

Thank you all for the advice. 

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