Q: What is a debt negotiation and debt arbitration?

A: First, it must be pointed out that there are two definitions of "debt arbitration." The first, and less common, is a legal proceeding, similar to small claims court, in which a "disinterested expert" hears the case of the debtor and his creditor, and makes a ruling for how they should proceed (i.e. how much the debtor should pay the creditor, and the terms of the payment, etc.)

But "debt arbitration" is also used to describe the process of using a professional debt negotiator -- aka a "debt arbitrator" -- to negotiate an out-of-court settlement. These debt arbitrators are not "disinterested," but instead, they work on behalf of the debtor. In this way, debt negotiation/arbitration is an alternative to bankruptcy or setting up a debt settlement plan.

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