Soon to be sued in Ohio

[PLOS1]

I was checking my annual credit report and noticed a soft pull from Javitch Block. I have a charged off account from Upstart for a large amount (30,000+ - stupid of me to take a personal loan for business, but no sense crying over spilled milk now).  I am certain the outcome of arbitration is going to be no better than letting the suit proceed through court due to the large amount of debt, so is there any drawback/benefit to pushing for arbitration?   Unless I can negotiate a substantial settlement, the most likely scenario either way is going to end up with a bankruptcy filing because I won't be able to have 25% garnished and keep up with my other bills.  I guess I'm not sure if it's better to have a judgement followed by bankruptcy or just arbitrate privately and file for bankruptcy once a judgement is filed. The Upstart agreement only allows for AAA arbitration:

       

Quote

 

If we are unable to resolve any dispute, except as expressly provided below, I agree that any

Claim (defined below) will be, at either you or my election, submitted to and resolved on an individual basis

by binding arbitration. Any such arbitration will be under the Federal Arbitration Act, 9 U.S.C. §§1 et seq. (the

“FAA”) before the American Arbitration Association (the “AAA”) under its Commercial Arbitration Rules

including the Supplementary Procedures for Consumer Related Disputes, in effect at the time the arbitration

is brought (the “AAA Rules”), or before any other party that you and I agree to in writing, provided that such

party must not have in place a formal or informal policy that is inconsistent with and purports to override the

terms of this arbitration agreement. The AAA Rules are available online www.adr.org. The arbitration

agreement in this Section 15 applies to any party named as a co-defendant with CRB in a Claim asserted by

me, such as servicers or debt collectors.

 

 

[nobk4me]

First, you need to know who the plaintiff is.  Is it the OC (Upstart)? Or a JDB?  Does your credit report indicate that the account was sold?  A JDB is more likely to walk away in arbitration than an OC.

But, either way, I would use the arbitration strategy.  I was able to beat an OC lawsuit, filed by this law firm, without using arb (this was before arb became a viable consumer strategy), by simply being aggressive with discovery.  Apparently these law firms have a limited budget for these cases, and they are not counting on an aggressive defendant who is costing them money.  They would rather drop the case than lose money.  Which is what using arb does, make them lose money.

[PLOS1]

Thank you for your response.  Upstart sold the debt to Velocity Investments. Velocity is not showing on my credit report, but the original upstart chargeoff is with a balance of 0.  I have not yet heard from the Javitch firm but I am sure it's a matter of time. Nothing showing yet on my court docket but they just did that soft pull 2 days ago. 

I doubt they will not follow me into arbitration due to the large amount owed, but i was thinking maybe I can get a decent settlement if I go that route and avoid bk? I'm so dejected.

[shadow99]

21 minutes ago, PLOS1 said:

I doubt they will not follow me into arbitration due to the large amount owed,

You never know.  I just had one non-suit a case after they agreed to arbitration - that's not as good as a dismissal with prejudice, but I'll take it.

It was for just under $17K.  Not as much as $30K, but I was sure they were going to follow me.

[Bulldoger]

21 minutes ago, shadow99 said:

You never know.  I just had one non-suit a case after they agreed to arbitration - that's not as good as a dismissal with prejudice, but I'll take it.

It was for just under $17K.  Not as much as $30K, but I was sure they were going to follow me.

I am sure a suit is coming like you say.  Last time I got notice from BK attorney in mail before I was served, 

I am using arbitration on and OC now and they will be making their third appearance on trying to stop my MTC. 

small debt sure if i get MTC it's over they will not follow. 

[PLOS1]

What are they arguing to prevent arbitration? My original contract is very clear on that. However, it says that it will be under "Commercial Arbitration Rules including the Supplementary Procedures for Consumer Related Disputes" even though this was taken as a personal loan.  Not sure if that is standard.

 

Thank you all for "talking" to me. 

[Bulldoger]

 

so it falls under these rules:

https://www.adr.org/sites/default/files/Consumer-Related Disputes Supplementary Procedures Sep 15%2C 2005.pdf

 

[Clydesmom]

2 hours ago, PLOS1 said:

However, it says that it will be under "Commercial Arbitration Rules including the Supplementary Procedures for Consumer Related Disputes" 

That is a major problem.  That basically puts it under business rules rather than consumer.  Consumer rules cap your fees at a few hundred dollars.  Commercial rules means the fees are split 50/50 and the party that prevails can be awarded their fees back from the losing party unlike consumer rules.  You REALLY need to read those rules VERY carefully.  The chances they backdown (the actual goal not really arbitrating) is ZERO given the size of the debt and ability to collect the arbitration fees from you.  A bad case in court is a bad case in arbitration.  A few consults with bankruptcy attorneys now seems like a good idea.

 

[PLOS1]

39 minutes ago, Clydesmom said:

That is a major problem.  That basically puts it under business rules rather than consumer.  Consumer rules cap your fees at a few hundred dollars.  Commercial rules means the fees are split 50/50 and the party that prevails can be awarded their fees back from the losing party unlike consumer rules.  You REALLY need to read those rules VERY carefully.  The chances they backdown (the actual goal not really arbitrating) is ZERO given the size of the debt and ability to collect the arbitration fees from you.  A bad case in court is a bad case in arbitration.  A few consults with bankruptcy attorneys now seems like a good idea.

 

Is it?  What does "including the Supplementary Procedures for Consumer Related Disputes" mean?     I have scheduled a consult with an attorney, but trying to get as informed as I can in the meantime. Thanks!

[PLOS1]

I found this, in case it helps someone in the future:

Q. Who pays the arbitration costs? 

A. Under the supplementary procedures, if the consumer's claim for actual damages does not exceed $10,000, the consumer's cost is set at $125. If the consumer's claim is between $10,000 and $75,000, the consumer's cost is set at $375. The business is responsible for all other arbitration costs in these cases. 

If the consumer's claim for actual damages exceeds $75,000, then the consumer is responsible for costs as set forth in the Commercial Dispute Resolution Procedures Fee Schedule. 

A full explanation of the costs can be found at the end of the Supplementary Procedures for Consumer-Related Disputes and in the Commercial Arbitration Rules and Mediation Procedures. 

 

And

 

 

 Q. What kinds of disputes are covered by these supplementary procedures? 

A. The AAA applies the Supplementary Procedures for Consumer-Related Disputes to arbitration clauses in agreements between individual consumers and businesses where the business has a standardized, systematic application of arbitration clauses with customers and where the terms and conditions of the purchase of standardized, consumable goods or services are non-negotiable or primarily non-negotiable in most or all of its terms, conditions, features, or choices. The product or service must be for personal or household use. The AAA will have the discretion to apply or not to apply the Supplementary Procedures and the parties will be able to bring any disputes concerning the application or non-application to the attention of the arbitrator. Consumers are not prohibited from seeking relief in a small claims court for disputes or claims within the scope of its jurisdiction, even in consumer arbitration cases filed by the business. 

Edited June 7, 2022 by PLOS1
Edited to add more info

[nobk4me]

What will probably happen, before they sue, is that Javitch Block will send you a dunning letter, the initial one that states you have 30 days to dispute the debt.  Be sure to send them a dispute/debt validation letter, sent by certified mail.  That will buy some time, and can set things up for a counterclaim if they violate the FDCPA.

[nobk4me]

Also:  how old is this debt, meaning, when did you default?   When was the account opened?

[PLOS1]

4 hours ago, nobk4me said:

Also:  how old is this debt, meaning, when did you default?   When was the account opened?

2019...well within SOL 

[Bulldoger]

On 6/6/2022 at 7:49 AM, PLOS1 said:

Any such arbitration will be under the Federal Arbitration Act, 9 U.S.C. §§1 et seq. (the

“FAA”) before the American Arbitration Association (the “AAA”) under its Commercial Arbitration Rules

including the Supplementary Procedures for Consumer Related Disputes, in effect at the time the arbitration

is brought (the “AAA Rules”)

Why does the contract specify both Commercial Arbitration Rules and Supplementary Procedures for Consumer Related Disputes? 

https://www.adr.org/sites/default/files/CommercialRules_Web-Final.pdf

 

 

 

[PLOS1]

I think there is a section of the commercial rules that deals with individual consumers. These are different from the standard consumer rules- the cap is $375 instead of $200.

[nobk4me]

Just for information, if they sue, they will probably file in the county court of common pleas, rather than the municipal court, since the amount exceeds the $15,000 jurisdictional limit of the muni courts.  Unless they only file for $15K, so they can use the muni court, to get a more creditor-friendly judge.  Not likely, but stranger things have happened.

The benefit, to you, is the common pleas judges are more likely, IMO, to strictly follow the law and are thus likely to grant your MTC Arb.  The downside, is their fees are usually much higher.  For example, the motion fee in my muni court is $20.  In the common pleas court, it is $75.00.   

[PLOS1]

2 hours ago, nobk4me said:

Just for information, if they sue, they will probably file in the county court of common pleas, rather than the municipal court, since the amount exceeds the $15,000 jurisdictional limit of the muni courts.  Unless they only file for $15K, so they can use the muni court, to get a more creditor-friendly judge.  Not likely, but stranger things have happened.

The benefit, to you, is the common pleas judges are more likely, IMO, to strictly follow the law and are thus likely to grant your MTC Arb.  The downside, is their fees are usually much higher.  For example, the motion fee in my muni court is $20.  In the common pleas court, it is $75.00.   

Thank you! This is very useful information. I have been checking both obsessively. Didn't know about the limits of municipal.  I don't really want to stop them from coming after me with arbitration, I just hope it is more favorable in terms of a settlement that can help me avoid BK. 

[nobk4me]

Yes, you need to keep checking both courts.  While they should file in the common pleas court because of the amount, it is possible for them to only file for $15K to sue the muni court.  It is in their interest to minimize court costs too.  While a creditor usually can recover the court costs from the defendant if they get a judgment, the fact is many judgments are never collected on.  The debtor may be judgment-proof, or they file bankruptcy.  In those cases the money the creditor spent to get the judgment goes down the drain.

[alwayswinning36]

On 6/10/2022 at 1:11 PM, nobk4me said:

Yes, you need to keep checking both courts.  While they should file in the common pleas court because of the amount, it is possible for them to only file for $15K to sue the muni court.  It is in their interest to minimize court costs too.  While a creditor usually can recover the court costs from the defendant if they get a judgment, the fact is many judgments are never collected on.  The debtor may be judgment-proof, or they file bankruptcy.  In those cases the money the creditor spent to get the judgment goes down the drain.

They can do that in Ohio? Have a case for $30,000 and to file in the lower court say "nah, we will just file for this $15,000 that's allowed here"?

[Clydesmom]

8 hours ago, alwayswinning36 said:

They can do that in Ohio? Have a case for $30,000 and to file in the lower court say "nah, we will just file for this $15,000 that's allowed here"?

That can happen anywhere.  The Plaintiff is not required to sue for the entire amount they are owed.  It is not uncommon to see them file in a lower court and waive collecting the rest because the costs are less and the process a lot less rigorous.  I have seen episodes of those court shows (which are essentially binding arbitration) where someone has a VERY legitimate case of slander and defamation.  A mentally off kilter "student" harassed and defamed this college professor big time.  Including getting slapped with restraining orders that he violated among other things.  The case was so iron clad the professor really could have collected a LOT of money to the point the 3 judges asked why he was on the show instead of in court.  The reality is that the "student" probably had nothing to collect from and the $5k he would get from the show's budget was way more than he would get in actual court.  Even Plaintiffs without a lawyer filing on their own sometimes make this choice.

[Flyingifr]

On 6/6/2022 at 7:49 AM, PLOS1 said:

I was checking my annual credit report and noticed a soft pull from Javitch Block. I have a charged off account from Upstart for a large amount (30,000+ - stupid of me to take a personal loan for business, but no sense crying over spilled milk now).  I am certain the outcome of arbitration is going to be no better than letting the suit proceed through court due to the large amount of debt, so is there any drawback/benefit to pushing for arbitration?   Unless I can negotiate a substantial settlement, the most likely scenario either way is going to end up with a bankruptcy filing because I won't be able to have 25% garnished and keep up with my other bills.  I guess I'm not sure if it's better to have a judgement followed by bankruptcy or just arbitrate privately and file for bankruptcy once a judgement is filed. The Upstart agreement only allows for AAA arbitration:

       

 

If a Bankruptcy is inevitable, I would see no reason to delay the filing until you are sued. The sooner you file, the sooner the 10-year FCRA clock starts ticking and the sooner it falls off your credit reports, along with all the rest of those nagging creditors you may have. Do you have any good reasons for delaying the BK filing?

[alwayswinning36]

On 6/12/2022 at 9:36 AM, Clydesmom said:

That can happen anywhere.

I'd sure love to see that happen in Texas. Texas Civ Pro prohibits doing that. Well, I suppose that is only when you actually have the amount of damages that would have required filing in a higher court at least. But if you totaled my car without insurance and I wanted to sue you for its FMV of $30,000.00 I couldn't just file for the max of $20,000 in small claims and be done with it there.

 

 

[WhoCares1000]

19 hours ago, alwayswinning36 said:

I'd sure love to see that happen in Texas. Texas Civ Pro prohibits doing that. Well, I suppose that is only when you actually have the amount of damages that would have required filing in a higher court at least. But if you totaled my car without insurance and I wanted to sue you for its FMV of $30,000.00 I couldn't just file for the max of $20,000 in small claims and be done with it there.

 

 

Here in Minnesota, we see the reverse. Many cases that should be in small claims are instead in regular court so that the plaintiff can use the pocket docket rules to try to confuse the defendant.

[Clydesmom]

3 hours ago, WhoCares1000 said:

Here in Minnesota, we see the reverse. Many cases that should be in small claims are instead in regular court so that the plaintiff can use the pocket docket rules to try to confuse the defendant.

Texas has the reverse also.  In Justice Court you need permission from the court to do discovery and you must submit your requests to the court for approval as well.  In Civil Court you just do discovery as part of the case process.  Some creditors have taken to filing in Civil/District Court in Texas to avoid the entire discovery process in Justice Court as well as reap the benefits that the full court uses ALL the rules of civil procedure and expects both parties to adhere to them.  They literally count on the defendant to be over whelmed with the process (in debt cases) and unable to afford an attorney to manage it for them.  In Pennsylvania and Georgia any case held in Magistrate Court is a trial de novo on appeal and in GA there is no discovery in Magistrate Court at all.  Creditors are now filing in State Court which allows for discovery and prevents the entire trial de novo if they win.  Any appeal would be based on the appellate system alone and not a complete do over.  

The entire point is while a case is eligible for filing in small claims court it does not mandate that the Plaintiff be required to use that venue.  The same goes for Civil Court.  There are many financial reasons why someone might file for less and use small claims the most common of which is many small claims courts do not allow attorneys for representation.  If the defending party can afford a lawyer and the filing party can't then seeking a limited amount to have a fair chance in court might be the better option.

[nobk4me]

@PLOS1, some things to consider as well.  You said the debt was a personal loan used for business.  I would recommend NOT telling anyone that.  Reasons:  Consumer protection laws such as FDCPA generally apply only to household or consumer debt; in arbitration, consumer rules are better and cheaper than business rules.; and, in Ohio, creditors cannot collect attorney fees for consumer debt.  Hopefully, it isn't obvious what the loan was used for.

It is best to remember that, when dealing with debt collectors and creditor attorneys, the less you say to them, the better.  Anything you tell them will be used against you.