Florida Bankruptcy: What is Arbitration? Part II
By Carmen Dellutri, Attorney at Law on Oct 20, 2007 in Bankruptcy Practice and Procedure, Benefits of Bankruptcy, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Collection Issues, Consumer Protection, Discharge Violations, Florida, General Bankruptcy Information
As a consumer bankruptcy attorney in Southwest Florida, I seek to protect the rights of my bankruptcy clients before filing bankruptcy (when the creditors are calling and harrassing them), during the process of the bankruptcy and after the bankruptcy discharge is entered. This blog follows the original What is Arbitration? wherein we discussed how arbitration comes about and why it is not in the best interest of consumers to sign contracts containing pre-dispute arbitration provisions. The purpose of this blog is to explain how these arbitration provisions can come back to bite the consumer later after a bankruptcy is filed.
In order to protect the consumer from creditors who violate the sanctity of the discharge order, it is sometimes necessary to file adversary proceedings or motions with the Court and seek judicial guidance on the course that the Creditor chooses. For example, the other day I filed a lawsuit against Select Portfolio Services. Select serviced two residential mortgages for one of my discharged clients. Unfortunately, their accounting system failed miserably on the days that my client needed financial information and the errors appear to have caused my client to over pay approximately $8,000.00. If Select had the opportunity to assert an arbitration provision they would probably want to do so.
One of the newest defenses to a discharge violation claim is that the bankruptcy court does not have jurisdiction to impose sanctions because there is no private right of action under 11U.S.C. 524. If this is true, consumers will be relying on their states consumer protection statutes more and more. If, however, the creditor is able to assert a pre-dispute arbitration provision, the consumer is still placed at a disadvantage. The consumer will be unable to pursue a jury trial unless the consumer had rejected all arbitration provisions in their chapter 13 plan and in their schedules. Accordingly, it is important to reject all arbitration provisions in leases and executory contracts.
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