Debt Collection: An Introduction to Arbitration and Litigation

July 17, 2009 - PRLog -- Debt Collection Activities, continued


The for Arizona business owners, four most effective and common types of debt collection activities are the demand letter, mediation, arbitration, and litigation. The value of these processes varies in every case, but the explanations of each one are explained below. This is the last in a series of articles from the Pak & Moring law firm about debt collection and business contract law, and deals with arbitration and litigation as they relate to contract debt collection for a business.


Arbitration

This is a similar procedure to mediation, but the final outcome is completely binding upon both parties involved. In arbitration, the legal council of both parties selects and agrees upon a private judge, and each side presents their case to this arbitrator in an out-of-court proceeding. This third party participant then issues a binding decision about the outcome of the conflict at hand. Arbitration will resolve the conflict faster than litigation and have a set answer to a business’ or debtors legal woes in a quicker manner. In many cases, this process will also be less expensive to both parties than a jury trial would otherwise be.

Litigation

The lengthiest and most involved option in collecting debt owed to you or your business would be to go to trial. This is the common process of moving a lawsuit though the count system in order to resolve the debt collection dispute. This is likely the first action many businesses think of, and consists of a suit being filed against the debtor  in an attempt to recover the money that the company is owed. In this scenario, both the debtor and the business hire legal council and move a case thought the courts until it is tried in front of a judge (and possibly a jury). This course of action is more appropriate for bigger debts of those where there is a substaintial dispute as to the debt itself. Litigation may be placed in Superior or the Justice court. Justice court handles matters of disputes totaling less than $10,000, while the Superior court is utilized for larger debts. Many companies will try their own cases within the Justice court, generally with the guidance of legal council. Of all the options for debt collection, litigation will likely generate the highest attorneys’ fees and take up the greatest amount of time.

To decide which method of debt collection is right for you, please contact Pak & Moring for a FREE consultation discuss your situation, and see what options is right for you.





(Please note: while informative, these posts are not intended to be formal legal advice and are not completely authoritative and should not be solely relied on as a primary basis for legal action.)

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Scottsdale based law firm, Pak & Moring PLC, provides the Phoenix area with exceptional and aggressive representation with the attention you deserve. Our firm handles legal issues involving personal injury, business law and contracts, and real estate.
http://www.pakmoring.com