Expert: Timmy Chou - 6/17/2003

Question
My wife received a letter informing of impending legal proceedings for a $1400 debt owed to her school for books from 6 years ago.  She has not been able to pay off this debt and is now faced with the situation of responding withen 14 days or face court which could result in the garnishment of her wages.  I have a few points wich might help you with your advice in this matter.  One, the letter is in her maiden name, not her legal current name (though she did open the letter).  Two, she did not receive her practicum which was part of her program at the college.  Three, she will be asking for a detailed statment of all the books owing and how much is owing on each book immediatily.  Four, the debt is now 6 years old.

Is there any advice you can help us with?                                                        PS. canadian

Answer
Thank you for your question!

Mediators act as neutral third parties to disputes and never "get involved" in judging the merits of conflict, but merely use special techniques to help the parties decide how to negotiate their own settlement.

I am not an attorney but can give you some advice based on my business consulting experience.  Note that this issue may have binding legal ramifications and you may wish to consult an attorney.

Because this matter has progressed so far it sounds to me as though your wife has been informed of the existence of the debt claim, and may in fact not contest it.  Usually consumer law permits you some time to be notified about the debt and to contest the validity of the debt before proceeding to court.  

There is likely to be very little you can do to avoid having to appear as the time to try to negotiate has passed for the school.  Schools will usually hire a collection company to go after these debts and these folks could care less about you.  

As far as your defenses: one, the name change does not matter; two, there is likely some small print in your agreement with the school that prevents you from withholding payment in one area from the school because of a dispute in another area; three, your wife would be entitled to a detailed statement but if she knew about the debt and did not request one before it may not be enough to delay the proceeding; four, it is likely there is no limiting statute with respect to a debt of this type or else the "fine print" waives your right to claim it.

I wish I had better news.  My advice is to immediatly call the school and try to get a payment agreement set up and forestall any judgement.

These are some ideas.  Feel free to follow up with additional questions.

For your general information, the pros and cons of the types of dispute resolution methods follows.

GOOD LUCK!

Arbitration, Mediation, and Litigation

Arbitration: the referral of a dispute to one or more impartial persons for final and binding determination outside of the judicial system

Benefits of Arbitration:

    Confidential, no public record
    Limited exchange of documentation, information
    Quick, don't have to wait for a court date
    Arbitrators have expertise in the subject matter and are trained in conflict resolution
    Cheaper than litigation
    Preserves business relationships

Negatives of Arbitration

    It's a compromise, no %100 winner
    Complex arbitration can be costly
    If not satisfied, may litigate the arbitration procedure
    Poor results with an unskilled arbitrator
    Both parties must agree to cooperate in the process

Mediation: the process by which parties submit their dispute to a neutral third party (the mediator) who works with the parties to reach a settlement of their dispute.

Benefits of Mediation:

    Neutral mediator can objectively suggest alternatives not considered before
    Parties are directly engaged in negotiating the settlement
    Can be quicker than litigation
    Less costly than litigation
    Preserves business relationships
    85% of American Arbitration Association cases mediated find successful solutions

Negatives of Mediation

    may not reach a binding decision
    unskilled mediator

Litigation: using the judicial system to resolve disputes

Benefits of litigation:

    a clear winner and loser
    uses a prescribed set of procedures
    more predictable outcomes
    is final

Negatives of Litigation:

    waiting for court dates can do more harm
    usually more expensive than mediation and arbitration
    part of the public record