Mediating Credit Disputes

Have you received a Summons to appear in Court for an unpaid credit card?  When you’re in debt, it can be tempting to pretend it isn’t happening.  Maybe if you just ignore the Summons, it will all go away.  But, is this a smart strategy?

Don’t get caught up in denial when a Summons from a debt collector is served.  It’s critically important that you show up in Court on the Summons.  And, if you’re lucky enough to be given the opportunity to mediate the dispute, just say Yes!

Mediation is a voluntary process where you and the creditor sit down with a neutral mediator and talk about the circumstances surrounding your debt.  The meeting is confidential — this means that what you say in Mediation cannot be used against you later in Court.  In this meeting, you will be asked first whether the debt is actually yours.  If it isn’t, this is the time to let the creditor know that a mistake has been made.  

Assuming it is your debt, now what?  You will most likely be offered some type of payment plan.  The attorney for the creditor wants to get this resolved too.  You can determine a monthly payment that gets the debt paid.  The creditor may offer to waive interest if you are successful in reaching an agreement.

In the mediation session, you might also be successful in negotiating a reduction of the debt.  If you are able to pay the bulk of the debt in one payment, the creditor may cut the principal amount to get it paid.  And, even if you can’t pay it all at once, it never hurts to try to get the amount you owe reduced.

A big advantage of entering into an agreement with the creditor is that typically the resolution will stop interest from being added on.  You can negotiate this.  The mediator is there to help the parties come to terms and get the agreement reduced to writing.

But let’s get back to the option of not showing up.  Did you know that if you’ve been properly served and don’t go to Court a default judgment is likely to be entered against you?  That means that you miss the opportunity to negotiate the debt and the full amount plus interest will go down as a judgment against you.

If you are offered mediation, it is a process you should definitely consider!  No personal judgments about how you find yourself in these circumstances.  Only the possibility of solving problems without a trial and before things spiral further out of control.