The legal process of collecting debt owed in New York typically starts by filing a summons and complaint or a motion for summary judgment in lieu of a complaint demanding the exact amount owed to you. If the case is handled properly, subject to having the requisite documents, you should be able to get a default judgment for the amount demanded without requiring the involvement of a judge.
When a debtor retains counsel or defends themselves, often they’re looking to delay payment. But does a contested claim mean that you’re looking at a long and heated trial that will require more of your time and money, especially if your contract requires litigation?
Not necessarily so.
A Real World Example
We recently settled a heavily disputed case. The case had an extended shelf life and the debtor must have grown tired of continuing to defend the litigation at an hourly fee to his attorney.
If the case had been in the lower civil court of New York (for matters of $50,000 and below), the case could have been resolved by mediators provided by the court.
Mediation is a non-binding resolution process where a mediator is either selected or appointed to facilitate a settlement between parties. The Mediator does not have any decision-making authority.
However, this case was in New York’s Supreme Court.
At one of the court conferences, the court attorney asked if the parties would like to participate in voluntary mediation under the court’s ADR (Alternative Dispute Resolution) program, which is run by the court system with participating outside mediators. Both parties agreed.
The Mediation Process
Depending on the county in New York where the case is, under this system, the parties are either assigned a mediator or are allowed to choose from a pool of mediators. The mediator will reach out to the parties and schedule a date for the mediation hearing. The mediator will also request a statement from each party prior to the hearing.
The mediation session will occur either in person or virtually. The initial part of the session (the first one to three hours) is free for court-run mediation. The mediator will often separate the parties in order to avoid the animus of a direct or confrontational discussion. This allows the mediator to discuss one party’s position and then ask questions regarding that position to the other party and vice-versa. Approaching conflict this way can often help bridge the gap between parties.
If mediation is productive but the parties have not settled the matter within the allotted free part of the session, the parties and the mediator will agree to continue the hearing. At this point, the parties will need to pay the mediator their hourly rate until they settle the case or exit mediation.
If settled, the mediator notifies the court that the matter is settled pursuant to specific terms, and the parties exchange settlement documents finalizing the deal.
It should be noted that some cases in New York must go through mediation before they can proceed to trial.
If you have a debt collection matter that you need assistance with, contact Frank, Frank, Goldstein and Nager for a consultation.
