- Debt arbitration
Debt Arbitration is the industry created around the practice of
debt settlement. Debt arbitrators are third-party institutions that work on behalf of their clients to negotiate out-of-court settlements for old bills, invoices, lawsuits, liens, medical bills, utility bills, judgements, and other types of significant debt. Typically, debt arbitrators are in lieu of credit counselingas a way to avoid bankruptcy.
Debt Arbitration Process
The major difference between debt arbitration and
credit counselingis the fact that debt arbitrators work independently on behalf of their clients, while credit counselors work on behalf of credit card companies. Debt arbitration itself is conducted through something known as debt negotiation. During this process, arbitrators negotiate a lump sum settlement for amounts owed to credit card companies - typically, at a significant discount to the actual amount owed. Clients then make more affordable payments to the debt arbitrators to pay off the remaining balance.
In the US, no states except New York currently require any form of licensing for debt arbitrators, the industry relies on independent associations to certify and provide ethical standards to those who train and practice debt arbitration. New York, however, recently enacted the "Budget Planner" law, which requires licensing for "for-profit" firms doing business in that state.
* [http://www.iapda.org/ International Association of Professional Debt Arbitrators (Professional Perspective)]
* [http://www.udmsa.org/ Official website of Uniform Debt Management Services Act (UDMSA)]
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