Author Topic: D. THROWING YOUR CREDITOR OUT OF COURT/Criticism of Consumers using Arb.  (Read 24748 times)

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mod2830

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Arbitration exercise can waive your opponent from court AFTER they sue you.

***THIS IS A COMPLEX SUBJECT AND CAN WIDELY VARY BY STATE***   

***PLEASE SEE CAUTION ABOUT WAIVING YOUR ARBITRATION RIGHTS, INADVERTANTLY, IN COURT***

What is an arbitration exercise? Its notice to the other side. Here's an example:

Dear creditor:

This is notice pursuant to the copy of the enclosed U.S. Bank cardholder agreement your firm REFUSED to send us as part of our FDCPA validation request.  We are exercising Section #43, in relation to the summons and complaint filed by your “client” in the above case.

Clearly, once Section #43 is exercised by any party in any dispute, the other party waives all rights to litigation.

We expect immediate dismissal of case #XXXXXXXX, in Anywhere County, WI, no more than 30 days from the date of this notice or we will petition the court for dismissal and sanctions against your client for willfully violating the very alleged agreement you are attempting to enforce.

If you decide to pursue any alleged dispute over this matter with the American Arbitration Association “AAA”, we fully expect your client to forward $250 to the “AAA”, per the alleged agreement, on our behalf, to fund a participatory arbitration hearing in our federal jurisdiction on our counter claims for your client’s willful violations of the FDCPA, and the Wisconsin Consumer Act.

Thank you,


When you do this you will, USUALLY, get 1 of 5 reactions from lawyer:

1.) They will ignore and keep litigating, which violates your FDCPA rights. You need to bring a MTD or MTC arbitration in court.

2.) They will acknowledge and ask court for a stay of the case pending outcome of arbitration.

3.) They will react with scorn and rage!!!! They will try to quickly jam an SJ down your throat, send you massive discovery, anything to get you to "play along" with litigation to show that you were not serious about arbitration. They may even lie, cheat, and steal. I had 1 lawyer deny existence of arbitration clause even when judge had it in front of them and their affiant said that was the agreement!!!! I'm suing this lawyer...

4.) They will just dismiss and surrender. http://www.debt-consolidation-credit-repair-service.com/forums/showpost.php?p=1037175&postcount=8 20 minutes in front of trial on a 5 figure credit card!

5.) They MAY move to try and strike their client’s own arbitration clause.   Our good friends at Zwicker & Associates are notorious for this.   There is no update if Zwicker has had success doing this.    It’s kind of a farce.   A creditor attempting to strike  the contract language they wrote!    Depending on what state you are in, this can be good.   If Zwicker did this in WI, Consumer law, generally, demands the entire agreement be struck.

#4 you should never argue with. "Without prejudice is OK" because your arbitration exercise, in the context of waiving their litigation rights, survives dismissal. If they sue again, lawyer violated FDCPA (See pre-lawsuit arbitration exercise for this point.)

#1 and #3 require action on your part. You need to bring a MTD or a MTC arbitration against scumbag. You need to draw up motion and call court clerk to get a date to hear motion. Judge is obligated to grant the motion under Federal Arbitration Act.

#2 Just insist that the "certified professional" bar lawyer initiate the arbitration. See all the problems this causes in the Pre-lawsuit post!

#5 may require a lawyer on your part.   This issue can get complex and their argument may nullify the entire contract under your state law!   Usually, if it comes to this, you have really flipped the tables on creditor lawyer!   Many times creditor may have to pay your attorney’s fees on an issue like this.   So check your state law!

MAIN KEY: Get/ask judge to order OC/JDB to initiate arbitration.   Tell judge that "opposing cousel is way smarter than you and is far more equipped with their law school education than you to initiate the arbitration."
« Last Edit: April 15, 2011 04:42:47 PM by mod2830 »

mod2830

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***ARBITRATION WAIVER***

THERE IS ALSO AN ULTIMATE CAUTION: YOU CAN WAIT TOO LONG TO EXERCISE YOUR CONTRACTUAL ARBITRATION OPTION ONCE IN COURT!

In my state you can waive your right to arbitrate by participating in discovery or a pre-trial conference...so don't wait forever. However, in other states, like CO you can do it 20 minutes before trial! There is no solid test, so be careful about putting this option off. Its like a DV, use it or lose it!

FL seems to be the worst state for this issue!   We have reports that doing ANYTHING, including answering the lawsuit waives your right to contractual arbitration.   So in FL, be careful.   Check your state law.

Most often your state has an Arbitration Act with case law that gives an indication when this is an issue.

Wisconsin's looks like this:

http://www.legis.state.wi.us/statutes/Stat0788.pdf

If you look at annotated case law under 788.02, the right to arbitrate may be waived.   However, the "test of arbitration waiver" is still unclear in WI.   It seems to be sometime after answer but before SJ or pre trial.   This issue itself could make for big court arguments and appeals.   

Again this varies by state.   In CO, 25 minutes before trial is not to late.  In Fl, 5 seconds after answer sometimes is too late.   

If you fall victim to inadvertant waiver of your arbitration right, don't sweat it, YOU ARE NO WORSE OFF THAN YOU WERE BEFORE LOOKING AT THIS OPTION.   It only means you can't force arbitration, you still have all the other defenses you had before.
« Last Edit: May 20, 2010 04:41:58 PM by mod2830 »

mod2830

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WHAT TO DO WHEN COURT TELLS YOU TO INITIATE THE ARBITRATION....

1.) Generally, you should always argue with your MTC arbitration in court that the other guy initate the arbitration.   Some judges will make them, some judges will make you.

2.) If judge tells you to initiate, DO IT!  Failing to comply with court order is (usually) never a good legal strategy.   Initiating arbitration is not end of the world and in many circumstances it helps if you do the initiation!

Sometimes, like in FL, it makes sense to initate the arbitration first, then bring MTC.   Sometimes judges in FL seem to not take the MTC seriously without arbitration being initiated.   In WI, always bring MTC first.   FL is a crazy state on arbitration waiver, so don't worry every state is Fl, but see it as a caution.

AAA will let you initiate a complaint against a company naming them as arbitration provider. http://www.adr.org/sp.asp?id=36427 However, clause needs to filter through their consumer protocol. There are approx. 600 business where the clause fails AAA protocol. This means AAA refuses to take the case if creditor refuses to amend the clause to meet AAA consumer protocol. http://searlearbitration.org/ Links to full Searle report comments on this issue.   This issue can get messy and take a while.

AAA refuses to release the list of businesses with unacceptable arbitration clauses.

However, if clause survives AAA protocol review, business can counterclaim against any complaint you file on them in AAA. Meaning they could counterclaim for the debt they are suing you for. I always reccomend staying away from AAA if JAMS is an option, even though the hurdles for the clause, and consumer protocol, for the OC/debt collector are big in AAA.

However, you will be faced with situations where AAA is the only option.   AAA is not the end of the world.   I am finding out they can be MORE FAIR than my local court.   

AAA does not hear that many debt collection arbitrations. NAF did 216,000 credit card arbitrations in 2006. AAA did about 900 consumer arbitrations in 2007. (This includes about 100 credit card issues, which were not neccessarily debt collection.) AAA also refused about 85 of those 900 cases for consumer protocol violations. So AAA is not even in same league as NAF in terms of caseload and procedures.

Please read AAA thread for more details.
__________________________________________________ ________
JAMS doesn't do debt collection arbitration. So JDB/OC cannot initiate in JAMS. (in theory)

http://www.jamsadr.com/consumer-arbitration/

Clause must also survive JAMS protocol review. If JAMS finds issues contrary to minimum standards for consumer, JAMS will also reject or demand Bank alter or waive unacceptable provisions.

Consumer initiates by filing out paperwork: http://www.jamsadr.com/arbitration-forms/

I always include a big complaint (FDCPA, state consumer law, deceptive trade practice, TCPA, etc.) against OC/debt collector, AND MAKE NO MENTION OF OC'S/DEBT COLLECTOR'S DEBT AGAINST ME THE INITIATION! This "complaint" is separate from the initiation paperwork.

Please see JAMS thread for further detail.
« Last Edit: May 21, 2010 02:58:31 PM by mod2830 »

mod2830

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These are the common criticisms about the consumer use of arbitration.

Criticism #1.)  You are waiving your right to a jury and right to appeal in court.

REPSONSE:  Pro se' litigants are the main ones doing this.   None of these cases will ever get to a jury anyway.   Maybe 1 in a million pro se' litigants ever wins an appeal and most of the time that litigant had formal law school training.   Lawyers would say, "hire a lawyer".   The problem is: these litigants cannot afford to hire a lawyer, so jury trial and appeal was never really an option to begin with.

Criticism #2.)  Creditors are not scared by this arbitration posturing.

RESPONSE:  I don't care whether or not they are scared.   I do know this strategy, at worst, produces a lot of delay.   I also know creditors hate the cost, or JAMS debt collection arbitrations would be filed by creditors left and right.

Criticism #3.)  Arbitration is not a panecea.

RESPONSE: I would agree.  You may lose an arbitration doing this, but not after consuming a lot of time and effort on creditor's part.   This gives you time.   If the unthinkable happens, and you lose the arbitration, you are still left with the option everyone of us has at the beginning, before we started to fight:  Bankruptcy.    I say  bankruptcy is better after fighting because you made the creditor spend a ton of money needlessly and you blew them out.  You took the shot and it didn't work.   So even if you fight and lose, you can still achieve victory.   You can still oppose confirmation in court.   Negotiate before confirmation.  Negotiate after confirmation.  Appeal court confirmation.  Sue/arbitrate against creditor on other issues.   Its really never over until you say it is!

Criticism #4.)  There is no proof arbitration works for consumer.

RESPONSE:   This is just a lie.   There is a whole slew of people who have won and continue to win electing  arbitration on their creditor in today's environment.   I posted a link to many of the winning stories.   Those who claim this has not earned consumers victory are keeping their eyes closed to the success.

Criticism #5.)  Arbitration is bad no matter what.  Court is always better.

RESPONSE:  This was true when NAF was in business.  That is no longer the case.  Local court MAY be better, but usually only if pro se' litigant is smart enough to navigate it.   I'm all for trying to get case tossed in court.   If you can get court to dismiss...DO IT!!!!   However, don't take a default or summary judgment!  Even the best trained bar lawyers lose SJ motions.   Don't gamble with judge, force arbitration and reset creditor back to beginning with a nice big arbitration bill!   I have defeated creditor SJ motions 100% of the time by compelling arbitration.   Not one creditor has got an award on me after 18 months where I exercised the arbitration clause on them!  2 of 8 creditors lost with mutual dismissal.  4 are locked in jurisdictional oblivion with no hope to advance, 2 are in arbitration and preliminary motions just started.  Arbitration will not be until Christmas...at the earliest.   And even on that one,we expect to win on JDB's violations of state consumer law. Hard to argue against that!

Criticism #6.)  You could end up paying the legal fees of creditor.

RESPONSE:  This is not as big of a danger as its made out to be.   It depends.   Some arbitration clauses state that legal and arbitration fees are borne by each side "regardless of outcome" of arbitration.   Translation: if you see that language....RUN THE BILL IF THE CREDITOR WANTS TO PLAY!    Whatever legal and arbitration fees you consume is sunk cost for creditor.   Some clauses do not prohibit this.   But consider this:  Arbitration forums are scared of suffering fate of NAF.   Even if legal fees are warrented against consumer, arbitrator may not award them if there were good faith defenses or offensive claims you prevailed on.   This risk is more the exception than the rule.   I still think the reward outweighs this risk.   Some state laws prohibit this kind of award even if contract specifies these fees can be awarded to the bank.   So check your state law!

Criticism #7.)  Court provides better odds of winning than arbitration.

RESPONSE:  Again. It depends!   There is no rock solid answer.   If you can beat it in court or see the path to win in court...by God, do it!   However, if you have no defense, the OC has got the paperwork, and you are going to get racked up on SJ because the local Maybury judge has determined you are guilty, arbitration exercise is brilliant strategy!   Don't take a judgment!   I don't care how you do it!   Just win!   Exercising arbitration against a JDB is a no-brainer.  9 of 10 JDB's will surrender than endure the cost of arbitration.  You ruin their numbers game.   However, I have found one JDB that paid and wants to play.   It has been the greatest experience and I'd do it again!

Criticism #8.) JDB's are not subject to arbitration clause of OC

RESPONSE:  This is the big JDB lawyer lie being foisted on unsuspecting consumers lately to escape arbitration!   If the JDB bought the debt, they bought the terms of the cardholder agreement lock, stock, and barrel.   They literally, "slide into the shoes of the OC".  Its too bad for them if the terms of the cardholder agreement work against them!   If a JDB lawyer says this, you may have a FDCPA cause of action against the lawyer.


Criticism #9.) Debt collectors are not subject to arbitration clause.

RESPONSE:  WRONG! WRONG! WRONG!   Most, if not all, clauses include "employees" or "agents" of OC or assign of OC.  Arbitrating against a debt collector is an adventure.   They range anywhere from writing you a check, to go away, to viciously having their lawyer insult you for daring to suggest the clause governs.  (In other words strengthen my resolve to make them my personal project!)   They never, ever, just pay the fee and arbitrate willingly.   DECLARE WAR ON YOUR NEIGHBORHOOD DEBT COLLECTOR...FILE AN ARBITRATION AGAINST THEM!

Criticism #10.)  Creditors are taking arbitration out of contract.   So consumer can't do it.

RESPONSE:  Yes this is true.  However, if you defaulted prior to 1/1/10, you can still do it.  OC's like Cap1, and Chase have been taking arbitration out this year!   AMEX and Bank of America made really scummy edits to the clause granting them unilateral alternate arbitration forum choice.   However, these new contracts do not apply if your account was in default before the edit by the OC.   OC's are stuck with the old arbitration terms.   If you defaulted after 1/1/10, it will be a game of chicken whether new or old agreement applies.   9 times in 10 the agreement you submitted will not be challenged, however that may change .
« Last Edit: August 28, 2010 06:18:40 PM by mod2830 »

Admin6572

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This thread is locked.

johnnydoe1

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I am confused about the 1/1/10 date claim....  Is that just a rough estimate? I thought it depended on when they send out a notice of change of terms (and then you can reject/close account). Were you just stating that as of 2010 cc companies have started sending out amended agreements with the removal of arbitration?
« Last Edit: June 01, 2010 07:27:07 PM by johnnydoe1 »

trueq

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That is just a rough date.

The earliest known amendment of taking arbitration out is 2/1/10 by Capital One.   So if default occurred before 2/1/10, the old agreement with arbitration would apply.

However, on the Federal Reserve site, where all cardholder agreements are posted by government, Cap 1 shows the 2/1/10 version as the cardholder agreement as of 12/31/09.

http://www.federalreserve.gov/creditcardagreements/

So dates may vary, but be careful...OC's are acting like it was a 12/31/09 change with government.   Otherwise, they would have posted the "old" agreement effective 12/31/09.

My free speech is not legal advice.  If you need legal advice, you need to talk to a lawyer.

Litigation Defense record
Arbitration record:   9 wins * 0 loses
Court Record:         2 wins * 2 judgments (1 of the 2 judgments has been vacated, other judgment upheld on appeal, marked "satisfied", because I wrote a check.)

The one bank that beat me in court, I now have a $2200 limit credit card from them again.
Redemption is always possible.

johnnydoe1

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Thank you, that is a great reference site!

Is there a post where people are listing changes in contract regarding arbitration?


So far I know of Capital One (2/1/10) and it seems BofA (6/1/10?)

trueq

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I think Chase took it out.

B of A did it today.

AMEX made really scummy edits this year to allow them to, unilaterally appoint and alternate arbitration forum.  (Meaning they could appoint an arbitration forum owned by the CEO's btother in law in theory.)

So lesson here: use those old agreements!
My free speech is not legal advice.  If you need legal advice, you need to talk to a lawyer.

Litigation Defense record
Arbitration record:   9 wins * 0 loses
Court Record:         2 wins * 2 judgments (1 of the 2 judgments has been vacated, other judgment upheld on appeal, marked "satisfied", because I wrote a check.)

The one bank that beat me in court, I now have a $2200 limit credit card from them again.
Redemption is always possible.

Dollar short

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If you are collection proof. It would seem to me arbitration would definitely be the way to go. The DC spends alot of money and if they do win -- they have a worthless piece of paper.

Quader

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If you are collection proof. It would seem to me arbitration would definitely be the way to go. The DC spends alot of money and if they do win -- they have a worthless piece of paper.
they also have to spend the time and money to get it confirmed in court
(you can still fight)
Q

trueq

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Also keep in mind there are several states that prohibit consumer debt colection arbitration confirmation like WI.

There are more states.

Here is a beautiful example of a case where consumer was "completely guilty" of defaulting, literally had no meritorious defense, and WI appeals court struck down the arbitration award confirmation.  This acase is hot off presses from last week!

http://www.familyandconsumerlaw.com/2010/06/adventures-in-arbitration-new-consumer.html

This is huge for me!  You have to prove procedural and substantive unconscienability as a defense to an arbitration confirmation.  Procedural unconscienability almost always nearly exists in every credit card contracts...thanks to this ruling, substantive unconscienability is almost a slamdunk now.   (Substantive unconscienability was always the difficult one to prove.)

Arbitration is a legal mess.   If the merits scream you're guilty, engage in the "legal mess".   You are really no worse off than getting racked on SJ.   I still say an arbitration award is better than SJ because its still defensable, almost all SJ's are not!

I hope to compile a list of states with similar WI consumer arbitration confirmation prohibitions someday.
My free speech is not legal advice.  If you need legal advice, you need to talk to a lawyer.

Litigation Defense record
Arbitration record:   9 wins * 0 loses
Court Record:         2 wins * 2 judgments (1 of the 2 judgments has been vacated, other judgment upheld on appeal, marked "satisfied", because I wrote a check.)

The one bank that beat me in court, I now have a $2200 limit credit card from them again.
Redemption is always possible.

mod2830

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As time goes on, more and more credit cards are taking arbitration out this year.

Capital One, Chase, and now Bank of America have now REMOVED ARBITRATION FROM THEIR CONSUMER CREDIT CARD CONTRACTS!

Expect more banks to follow suit!

Cap 1 and Chase removed in Feb 2010.  Bank of America June 2010.

If you defaulted with these 3 banks prior to the amendment, you still have arbitration under the old contract.   These banks cannot amend accounts already in default as of the amendment date!

If you defaulted after the amendment of arbitration out, don't fret.

There are 2 possibilities:

1.) Submit old contract and claim you never got amendment.

2.) Challenge the idea that arbitration clauses can be amended out!

#2 is a maverick legal notion and will make case law.   As an example, the old Cap 1 arbitration clause says:

The arbitration clause survives account suspension, termination, revocation, "or changes in this agreement".

The clause survives any event...including attempted changes of the agreement.

I think its a hard sell to argue creditors can take arbitration clause out for those credit card customers that once had them in.

This issue is going to go the full 15 rounds in court someday!

So don't fret if you defaulted after the arbitration amendment took it out!

I think there is an excellent case to be made arbitration is still available!


m1530

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How would this apply apply if you defaulted in 2010, but haven't used the card since mid 2009?  Is it the agreement you are under as of the last time you used the card, defaulted, or both?

trueq

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Usually, its the last time you used the card for a purchase or cash advance.   Since you did not do any of those things after the amendment, I would make the case that you did not agree to the amendment. 

Some may argue a payment after amendment is agreement to the amendment.   In this case, its best to send a "rejection" of the amendment, IN WRITING, (save a copy),  bank will close the account, and you can pay under old cardholder terms.  (You will not be allowed to make any charges after rejection.)

So, great point...REJECT THOSE AMENDMENTS WHEN YOU GET THEM...IN WRITING.

SAVE THE ARBITRATION CLAUSE!
My free speech is not legal advice.  If you need legal advice, you need to talk to a lawyer.

Litigation Defense record
Arbitration record:   9 wins * 0 loses
Court Record:         2 wins * 2 judgments (1 of the 2 judgments has been vacated, other judgment upheld on appeal, marked "satisfied", because I wrote a check.)

The one bank that beat me in court, I now have a $2200 limit credit card from them again.
Redemption is always possible.

 

credit