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Ask Brent Blanchard Your Own Question
Brent Blanchard
Brent Blanchard, Bankruptcy Attorney
Category: Bankruptcy Law
Satisfied Customers: 1975
Experience:  Twelve years experience in all aspects of debtor & creditor BK.
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I have been served to appear for compulsery arbitration on

Resolved Question:

I have been served to appear for compulsery arbitration on a credit card debt. I am in the process of filing bankruptcy, but havve not yet paid in full for filing. What will h appen if I do not appear? Will it affect this debt as far as the bankruptcy is concerned?
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  Brent Blanchard replied 8 years ago.
The answer and final outcome will depend on the timing and nature of the credit card debt,Customer

Failure to appear generally results in a default decision against you, in which the creditor almost always gets everything they ask for. Then the arbitration award is usually taken to court and converted to a judgment (your credit card agreement probably spells out the rights and procedures on this).

From a bankruptcy standpoint, there is *usually* little difference between a debt that is pending and one that has been converted to a judgment. Most of them remain equally dischargeable if you are talking about a Chapter 7 liquidation.

The hazard of failing to appear comes in whether the creditor asks for "findings of fact" that would endanger dischargeability of the debt. In a Chapter 7, debts arising from fraud and "intentional injury" to another are generally not dischargeable. _Findings of fact from a prior arbitration or court decision, if they satisfy the BK law requirements to prove fraud or intentional injury, etc., can be used against the debtor in the BK proceedings if the creditor wants to.

If you are filing a Chapter 13, those types of debts can be discharged, to the extent that they remain unpaid after completion of the 5-year payment plan.

Thank you.

Customer: replied 8 years ago.

This is debt from 2002 and before. I have not paid on this debt since 2002, due to not being able to pay.


I am filing Chapter 7, and no fraud was involved. I didn't run up my Credit Card then file for Bankruptcy - I just got to a point that I could only pay my rent and utilities and food.


There is not prior arbitration or any judgements.


What would be the benefit for appearing for the arbitration

Expert:  Brent Blanchard replied 8 years ago.
The benefit is limited--it proves that you at least tried to participate "in good faith". That can affect your rights later if something goofy happens.

You can also prevent the creditor from taking advantage of an "anything goes" arbitrator by asking for the types of "findings of fact" discussed in the prior answer.

If you have not participated in the arbitration proceedings by sending copies of your own "discovery documents" to the lender, or by not submitting your own arbitration brief (if one was ordered to be submitted by the arbitrator--which they usually are), then your appearance and active participation would un-do some of the damage of not participating earlier.

There is also the potential benefit of tendering a "laches" defense, if the credit card company wasn't sending bills for a few years before making the demand for arbitration.

Or, you could take the risk that nothing funny will happen and the award and ultimate judgment would remain in the ordinary dischargeable debt category. Regardless, you should make sure that the BK is filed BEFORE the creditor can garnish your wages. That gets very ugly, financially, very quickly.

Thank you.

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