Who has the responsibility to initiate repayment of a debt after arbitration?

[monkeys4freedom]

What is the name of your state (only U.S. law)? Pennsylvania

My husband went to arbitration because he owes money to a college, but disputed the amount. (They said he owed $60,000, he said he owed $7,000.) The arbitration decision was that he owes $20,000. It has been a month or two and the college has not contacted him about paying the $20,000. My husband claims that he doesn't need to initiate contact or send them any money right away.

Is this correct? Can anything bad happen if he waits until the college contacts him?

 

[Proserpina]

What is the name of your state (only U.S. law)? Pennsylvania

My husband went to arbitration because he owes money to a college, but disputed the amount. (They said he owed $60,000, he said he owed $7,000.) The arbitration decision was that he owes $20,000. It has been a month or two and the college has not contacted him about paying the $20,000. My husband claims that he doesn't need to initiate contact or send them any money right away.

Is this correct? Can anything bad happen if he waits until the college contacts him?

Is there any reason why he can't call them and sort out the payment plan?

Surely that would be best solution?

Otherwise...well, he may end up paying a lot more than the initial amount (added interest, judgment if they go that far...)

 

[dcatz]

Your husband is right about not needing to initiate contact, but he runs the risk of trading a voluntary payment agreement for enforced payment, if that matters to him.

You haven’t mentioned whether the arbitration was binding or non-binding. If it was the latter, the college may have the right to just sue him for the balance that it originally claimed and try it’s luck anew in court. The results of the arbitration are merely "informative" (and, depending on the arbitration agreement, may or may not also be introduced as evidence).

Given the pre-history that you’ve provided, it’s more likely that the arbitration was binding. If so, the award still lacks the effect of a judgment. It must be “confirmed”. This is done by filing a motion with a court to give the arbitration award the force of a judgment. (for your state, see 231 Pa Code, Rule 1328).

While your state is more “debtor-friendly” than most, your husband goes from being on the wrong side of an arbitration award to being a judgment debtor with all that that implies.

There can be more nuances, depending on terms of any pre-arbitration agreements, but those are the basic distinctions.

 

[monkeys4freedom]

Thanks dcatz

Thanks dcatz. That helps a lot. Are they legally allowed to "confirm" the judgment without ever contacting him about the debt first? Are there other disadvantages to being a judgment debtor? Can it affect his credit or anything?

 

[dcatz]

To be more semantically accurate, it’s the arbitration award that they confirm to get a judgment, but yes, I believe your husband will find that there is more stigma and disadvantage attached to being a judgment debtor than to having lost an arbitration. And yes, a judgment can and probably will adversely affect his credit.

The party attempting to confirm an arbitration award is required to file and serve notice of a confirmation proceeding and your husband may choose to file a response:
Rule 1328. Motion to Confirm Arbitration Award as an Original Proceeding.
(a) Any party may file as an original proceeding a motion to confirm an arbitration award if the arbitration award was entered pursuant to Rule 1327(1). The motion to confirm such an award shall be filed in the county in which the defendant resides or has a place of business or, if there is no such county, then in the county in which the arbitration hearing was held.
(b) The motion shall begin with a notice substantially in the form prescribed by Rule 1331 and shall be served in the manner provided for service of original process in a civil action.
Official Note
Section 7317 of the Judicial Code, 42 Pa.C.S. § 7317, provides that, unless the parties otherwise agree, notice of an initial application for an order of court shall be served in the manner provided by law for the service of a writ of summons in a civil action.
(c) The motion shall contain factual allegations establishing that the arbitration award was entered pursuant to Rule 1327(1).
(d) A responding party who opposes the motion shall file an answer to the motion within thirty days after service of the motion.
(e) If the responding party does not file an answer, the prothonotary, upon praecipe of the moving party filed after the answer was due, shall enter judgment upon the arbitration award.
(f) If the responding party files an answer, the motion shall be decided pursuant to the court’s procedures for deciding motions.

Again, we don’t know what kind of arbitration led to your post. We do know that, prior to the proceeding, the college lacked the coercive power of legal enforcement in any form provided by state law. After converting the award to a judgment, it will have that power. Only you can know the full significance of that.