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There is several ways to approach this issue, passively vs. aggressively.   (I have to completely give credit to MG05 from CIC on aggressive approach.)

You get a FDCPA dunning letter from debt collector/lawyer.

You respond with an excellent Debt Validation (DV) letter.

Somwhere in DV put, "If there is an underlying arbitration clause associated with this claim, I hereby exercise it, and waive your litigation rights to this claim, per the underlying arbitration clause."

You should also make a demand for a copy of the contract with the arbitration clause.

Point #1) You are not required to file an arbitration by doing this.

Point #2.)You have provided notice of your dispute resolution intentions, if they sue you in court, they have violated the exercising a legal right that does not exist...ergo arbitration election waives other parties right to litigate.

What options are left if OC/JDB cannot litigate claim?

OC/JDB can arbitrate.

Remember AAA will not accept filings from  business against consumer.  So with AAA and NAF only arbitration clauses, OR AAA only clauses, they are stuck.   They could sue, but the lawyer would give rise to a cause of action under FDCPA or state consumer law. Check your state law.   Electing arbitration waives your opponents right to the courtroom.   If they sue in a public forum, your local court, when you elected a private forum, arbitration, to resolve the dispute, they are being misleading as to what contract says about your right to force a private forum to resolve the dispute!

For clauses with JAMS:  Judicial Arbitration Mediation Service (JAMS)---JAMS Chief legal counsel, Jay Welsh, said at FTC hearing 9/29/09, JAMS doesn't do debt collection arbitration.

Jay Welsh's full statement:
(page #72 is the most interesting)

However I don't believe it.   Treat JAMS that they will accept creditor filings for debt collection.   However, a creditor has to spend $3000 to get there, so there is no incentive for creditor to do this.

So debt collector cannot arbitrate pre-suit either by current forum rules or chose to do it very expensively in JAMS.

What are the creditors/JDB's options pre-suit, after you slap them with arbitration "election" in your DV?:

1.) JDB/OC could get an agreement from consumer on an alternate arbitration forum. This is about as likely as time travel to Pluto.

2.) JDB/OC could file suit. This would violate the FDCPA and give you cause of action against lawyer and law firm. You can still compel court to arbitrate suit with a dismissal or permanent stay. (See next post on post lawsuit arbitration exercise.)

3.) JDB/OC could, instead of filing suit, seek a declatory judgment from a court to strike their client's own arbitration clause. "Declatory Judgment" is a fancy term that they got a court to say the arbitration clause cannot be enforced against them by you. I believe this would also violate the FDCPA in several ways. A.) debt collector/OC represented the contract to you for private right of resolution (arbitration) which they are trying to now deprive you of; through such a motion. B.) Challenges to the arbitration clause in the contract IS LITIGATION, which violates FDCPA because you waived their right to litigate on all contractual disputes!!!!!! (This is poetic justice because consumers used to litigate to escape arbitration, but creditors did not have FDCPA to protect them when creditors waived consumers out of court and the consumer continued litigation!!! So its not as easy for the creditor to get clause struck as it was for the consumer!)


This is the pre-suit passive approach, the next post is the pre-suit aggressive approach.

I used to get sued regularly.   I started doing this in Jan 2009.    I've done this 78 times in DV'S now. 0 lawsuits.   During that time I sent a 1 DV out without the arbitration election AND I GOT SUED!
« Last Edit: May 21, 2010 02:43:33 PM by mod2830 »


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This post covers the MG05 method of agressively filing arbitration against creditors before they sue!

Again, that word "crazy" may come out.   I even thought so!   My original goal was to put creditors in an arbitration box, but sometimes that is not the best approach!

There is a fine gentleman from FL, MG05 that sold me on this.   (The crazy arbitration guy having to sell the other crazy arbitration guy on arbitration, how ironic!)

Again if you followed the advice above, it becomes a waiting game.

Some don't like to wait.   If a CREDITOR'S attorney duns you under the FDCPA, YOU CAN FILE A PRE-EMPTIVE ARBITRATION!

Doing this brings the issue to an immediate head AND COMPLETELY CUTS OFF ANY POTENTIAL TO SUE YOU!   This is very effective against JDB's where you have FDCPA violations on them and make the FDCPA claims against them as part of the arbitration.   I do not reccomend, but you can, do this to OC's, but you better have some claims on them under state or federal law behind you.   They are more likely to pay the arbitration fees.

You can file with AAA or JAMS.

How do you know what is in arbitration clause?

Most bank cardholder agreement contracts are posted here. I helped contribute my knowledge base of cardholder agreements to this site along with many other consumers using arbitration to beat creditors back...

Besides, 9 times of 10, creditor lawyer DOES NOT have a copy, and they certainly will not give you arbitration clause anymore.   I had one creditor attorney, who knew what I was going to do, literally try to cut arbitration clause out of the cardholder agreement with a scissors!   (Too bad for him I had a copy already!)

So get the contract, file the arbitration!

This strategy is very effective against JDB's.   You file by filling out initial paperwork with the forum in contract (always chose JAMS over AAA when possible).


Do not pay fee, and read JAMS thread first!


Do not pay fee and read AAA thread first!

Follow instructions.   Not neccessary to file your official complaint with paperwork just fill in what you are suing JDB/creditor for: like FDCPA, FCRA, TCPA, state consumer law, deceptive trade practice, tort, civil RICO for the really aggressive, etc.   The full complaint can be filed later.

In my experience the JDB REFUSES to pay the fee and goes away.  You could pay the fee for them and commence the arbitration if you wanted.

However, if they just go away, they really cannot sue you because you can say to judge, "judge, I wanted to settle this back on X date and they failed to cooperate by paying the contractualy obligated arbitration fee."   Most judges should toss the case on the spot.

If JDB does sue you in that situation, you may have a claim against them under FDCPA and state consumer law for exercising a legal right that does not exist.   you waived their litigation rights with the arbitration filing.

You can do this to an OC, but be aware OC is more likely to pay the fee, not always, but more likely.

Some JDB's want to play, but they pay, and pay and pay.

Arbitration is not cheap and easy like the claim.   The longer it goes, the more the JDB has to pay.   This is especially true in JAMS, where arbitrator makes $400-$500 an hour.   2 partially adjudicated motions in JAMS took 6 hours in one of my cases and they were small procedure motions.

Sometimes JDB will pay you to go away.   I got $1300 from JDB because they did not want to pay the $1800 fee in AAA to proceed.

Sometimes your court rules, like FL, make it better to push it to arbitration first.

MG05 if you join, let me know, you can edit this post for better comments on this subject.

« Last Edit: May 21, 2010 02:47:20 PM by mod2830 »


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I've filed at least 10 pre-emptive arbitrations:

I have yet to run into one creditor/JDB that just went ahead and paid the initial JAMS or AAA non consumer and consumer fees without raising a stink about something or just refusing to pay!

Chase was the quickest one to ever pay (8 weeks from filing) on the pre-emptive arbitration for FCRA violations in JAMS.   I figured they would delete rather than shell out $3000 for JAMS...boy was I wrong.

Don't let me discourage you from using arbitration to get credit deletion, many consumers are finding out creditor would rather delete the derog than pay the arbitration fees.    Chase counterclaimed for debt.   Chase, wrongly assumed they were getting a payday from me.

But there is a silver lining, they counterclaimed for debt they don't own!   Some of the claims were TERMINATED AND INDEMNIFIED BY A JDB IN A SETTLEMENT AGREEMENT 3 MONTHS AGO.

So not only has Chase stepped in the pooh patch, so has this JDB by breaching the settlement agreement.  (They agreed not to transfer the terminated debt.)

My experience is:  JDB's refuse to pay 8 times in 10.   Creditors about 4 times in 10.   Neither one wants to arbitrate, willingly, especially in JAMS.  The creditor has to flip the freight of the bill.

If they don't pay, arbitration is dead.

I had one creditor take 6 months to pay under court order!

Do you see the picture emerging of creditors now are the ones resisting arbitration?

They resist because if you remember the history of arbitration, arbitrations were meant to prevent the public spectacle of huge damaging class action lawsuits in court.  It was never meant for small consumer matters.  Then Mann Bracken (and others) had a forum to make it feasable for creditors for small consumer matters.    The "cost efficiency" is now gone for creditor with NAF being gone.   Other forums have made pro consumer rules  from the debacle of Mann bracken dragging consumers into this process on a large scale.

Result?   A confluence of events where you can make creditor pay huge money to resolve small consumer matters.   This equals leverage.    What happens if 10,000 of us filed a JAMS FCRA arbitration against Chase over derog creditlines?    It would cost Chase about $30 million just in arbitration fees to start!   This does not account for Chase attorney time!

Why do you think creditors are not using JAMS to collect debt? JAMS is the only forum to accept filings from creditors against consumers.   (If we assume JAMS is not being truthful to FTC.)   If JAMS truly is not taking debt collection initiations from creditors, creditors are in a pickle if you exercise clause pre-suit!
« Last Edit: May 21, 2010 12:36:13 AM by mod2830 »


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