Hello, I am in debt with MBNA since 2003. The account was opened in 2003 from New York City, where I reside. My balance to date is $5,331.43, that I do not have. I received a letter that says: "As you are aware, your delinquent account was submitted for binding arbitration and an arbitrator has issued an award against you. This amount is due and owing. We are providing you with an opportunity to contact our office in order to resolve this matter. Please note that in the event this Arbitration Award remain unpaid, our client has requested that we evaluate your account for judicial enforcement under state law." I do not understand this letter and what could happen to me if I do not pay immediately. Could they cease my assets? Would I go to jail for not paying? Thank you!
Normally to collect on an arbitration award, other than just asking you to pay it, it must be reduced to a judgement in a normal court. After that, their remedies to collect would be similar to judgements obtained directly by suing in court. Not being able to pay a debt, or even a judgement, is not a crime. You would not go to jail just because you can't pay. There could, however, be sanctions if you were to try to hide assets and fail to disclose them if a court ordered you to do so. Once they obtain a judgement, they can proceed to garnish wages or attach bank accounts, subject to state law. State law often places limits on what part of wages can be subject to garnishment. In addition, once this is reduced to a judgement, you may acrue interest until you pay, however it will probably be at a rate set by state law, instead of at the rate on your cardholder agreement. Reducing the arbitration award to a judgement is probably what their letter is referring to. Were you notified of an arbitration proceeding? Did you respond? Did they win?
Thank you. Would it be to my interest to try and settle this account? They said they could settle it for $3,300.
If you could settle in full for $3300 on an award of $5331, it might make sense to do so. You might both avoid a judgement on your reports, and pay out less than they might collect if it was reduced to a judgement. It is not uncommon to settle for less than an award or judgement, in order to actually get payment. But you want the agreement in writing. You don't want some other debt collector coming back for the rest after you think it was settled in full but they sell it off. The exception might be if they obtained the arbitration award without proper notice, etc, you think you would prevail in court, and you want to fight it. If the account was fraudulent, or otherwise not yours, yet they rammed thru an arbitration award without any validation or proper notice, you might want an impartial decision by a judge instead of what they got.
