Credit card arbitration soon to be history?

The shenanigans of one of the leading credit card arbitration companies have embarrassed the credit card issuers and looks as if it will cause most of them to cancel arbitration contracts.

Credit card issuers started setting up mandatory arbitration procedures for their card holders about ten years ago.  If you fall behind in your payments, and do not agree on a satisfactory payment plan, they set up an arbitration procedure during which you are allowed to dispute the debt.  Sometimes the companies turn the debt over to a collection agency and let them conduct the arbitration.

Usually card holders ignore the arbitration procedure, and even if they respond, they usually lose.  In about 95%-98% of the cases, the arbitrator rules in favor of the creditor and they then can take that ruling to court to further their collection efforts.

To make this procedure fair, the arbitrator is supposed to be neutral; but as the Wall Street Journal recently revealed, the largest arbitration company (the National Arbitration Forum — NAF), and two of the largest debt collection services (Forthright and Mann Bracken) are owned or partly owned by the same firm, Accretive LLC. This is a clear conflict of interest, since the ruling of one sister company are useful to the other one, and now that it has been exposed, NAF is no longer doing arbitration.

If you have trouble with your credit card payments, and your credit card company refuses to make adjustments to your interest rate or payment schedule, I suggest you do not bother to negotiate with their collection agency.  Nor should you wait until you are summoned to court.  Take the initiative, and go to the National Foundation for Credit Counseling where you can find a Consumer Credit Counseling agency in your area.

Consumer Credit Counseling agencies will help you with a debt management plan (for details click here: or they will suggest you consider bankruptcy (, which can do away with all of your credit card debt.

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