Wrongful Arbitration and Emotional Stress Damages from Agressive Collection

Many normal American households are lulled into the social norms of credit cards and debt. Everyone has a credit card, or so we think. How many of your neighbors do you think own their homes free and clear? Ask any American, and the answer is clear, we believe in making the mortgage payment! The same is true with credit card accounts.

The dark side of living the American Dream with credit card accounts is when sh*t happens in life. A financial hardship, a sudden loss of a job by one spouse or both, investments gone bad, or even a medical emergency can trigger sudden financial hardships. And in today's debt-laden households, that trigger can result in delinquent credit card accounts. If these happen to be MBNA or FIA Card Services based, those consumers may very well be swept down the Wrongful Arbitration path.

The psychological hit of losing a job, or a large investment, or catastrophic illness, will not sway FIA or MBNA. They will aggressively mount collection efforts. When those fail, we contend there are thousands of cases where MBNA / FIA used the National Arbitration Forum to rubber-stamp an Award, and then converted the potentially illegal award, into a Money Judgment. If they are able to identify any assets that can be turned to liquidity, they will then cause the local Sheriff to seize your money.

This does sound like the IRS, doesn't it? In the case of the IRS, Courts have frowned upon this behavior.

Court Awards $10,000 for Emotional Distress Inflicted by IRS
This month's "Shop Talk" column in the Journal of Taxation has an interesting item about In re Rivera Torres, 309 B.R. 643 (1st Cir. Bankruptcy App. Panel 2004), in which the court awarded a taxpayer $10,000 for "emotional distress" inflicted by the IRS. After the bankruptcy court discharged a married couple's debts, including a $22,000 tax liability, the IRS repeatedly tried to collect on the discharged debt. In awarding the $10,000 damages against the IRS, the court considered the testimony offered by the couple about the emotional damages they suffered from the IRS's aggressive collection tactics. The column concludes:

Unfortunately, [the case] provides little support for stressed-out taxpayers dealing with the IRS prior to their bankruptcies....[W]e hope that other taxpayers don't have to become bankrupt before they can recover damages from [the] IRS in "traumatic" situations.