Credit card problems not solved with arbitration

For a while now most credit card companies have inserted a mandatory arbitration clause into their contracts.  This is to force their customers to settle credit card problems with arbitration and prevent them from suing.   The state of Minnesota Attorney General recently charged that one arbitration company was financially attached to the credit card companies and not, therefore, a true arbiter.  They pointed out that credit card companies win 94% of these arbitration cases.

This settlement has led to refusal by that company and the venerable American Arbitration Association from accepting any new credit card arbitration cases.  And Congress is considering changes in the law.

To me this is a tempest in a tea pot.  I have handled a lot of credit card problems and none ever went to arbitration, much less to court.  Who can afford to pay a lawyer to sue a credit card company?  If the company takes you to court to force you to pay up, as some do, you will probably appear for yourself.  The only way you are likely to bring your own credit card problem to court is if you file bankruptcy (which can erase your credit card debt completely).

Most of the cases that go to arbitration are disputes over how much is owed.  And there is a much better way to settle these:  Make them an offer.  Credit card companies are running scared because of the recession, and much more willing to make deals.  If you pay them off they will often take half (or even less) of what is owed.

If your debt is overwhelming you need to consider a debt management plan, and if that does not do it, bankruptcy.  Click here for information on counseling on debt management plans from an organization that I would trust to make a good deal for you and execute it well.

If your problem is a mistake on a charge, there is a federally mandated procedure for solving that credit card problem.  Click here to our main article on handling Credit Card Dispute Problems.

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