When parties are engaged in disputes, they can’t seem to settle among themselves, one course of action is to head to civil court. But court is messy and time consuming. Civil trials can be expensive. So what can parties do to avoid court? One option is to utilize some sort of alternative dispute resolution (ADR).

ADR is not a single practice or procedure. Rather, it is a collection of dispute resolution options that keep parties out of courtrooms. One of its main advantages is its ability to avoid expensive monetary awards and the hassles of trying to collect them. In that sense, ADR has a definite link to debt collection.

When Parties Go to Court

The best way to understand this link is to first look at what happens when parties go to court. Imagine a company suing a customer over a significant past due balance. It is a slam dunk; the company wins the case. As a result, the court awards the company the entire balance due plus attorney’s fees, court costs, late fees, and interest.

A victory in court may indeed be sweet, but it is no guarantee the company will actually get paid. Collection efforts may yield the entire sum, nothing at all, or an amount somewhere in between. Either way, collecting the debt is likely to be just as difficult as trying to settle the original bill that landed the two parties in court.

Time Consuming and Frustrating

The experts at Salt Lake City’s Judgment Collectors say that the service they offer is very much in demand because collecting outstanding judgments is both time consuming and frustrating. Judgment creditors simply do not want the hassle of trying to collect in-house. So they bring in an agency like Judgment Collectors to do the work for them.

What does any of this have to do with ADR? The link between ADR and debt collection is an adversarial one. In other words, parties typically agree to ADR in order to avoid court. Without a trial there is no judgment. Without a judgment there is no extemporaneous monetary award.

Typical ADR Outcomes

Although there are many different ways to settle a dispute through ADR, there are four typical outcomes. The first is neutral evaluation. This is a situation in which a third party, also known as a neutral, evaluates the details of a case and then offers an unbiased, third-party opinion. The neutral helps both parties see the strengths and weaknesses of their respective cases – as sort of a reality check to encourage them to work things out.

Three additional outcomes include:

• Mediation – A mediation scenario is one in which a third-party helps to negotiate a non-binding settlement between the parties. One of the goals of mediation is to find a way to allow both parties to exercise at least some control over the outcome.
• Arbitration – An arbitration scenario involves a mediator who looks at the evidence in much the same way a judge or jury would. However, an arbitrator usually tries to avoid delivering a binding solution. Instead, they would rather lead the parties to a settlement they can mutually agree on.
• Settlement Conference – The settlement conference is just one step below a bench or jury trial. The parties attend a conference in a judge’s chambers, where the three of them work out a settlement the court finds acceptable.

ADR avoids the formality of a bench or jury trial. Where monetary payments are involved, the means of payment is usually settled during the resolution process. As such, traditional debt collection is avoided altogether.