I have done a few collections claims ancillary to the work my firm takes. We use small claims courts for basically every collections claim. We win almost every single time. Even if there is a "dispute," its almost always about their inability to pay. Of course there are legitimate disputes that come up and in those cases we have an intensive hearing, or we have to tell our client to pony up with more evidence or they are out of luck. However, the benefit to small claims is in most courts the rules of evidence apply (and the judge is free to loosen them as they need to) and in private arbitration there is not.

I think there is possibility for arbitration in this area to be reformed, and it must be so. It is easy for people to sit here and bemoan how we need small claims hearings for all these cases..... Have any of you sat in on debtor-creditor day at a metro area small claims court? You have a judge who sits and hears maybe 100-200 of these claims in 2-3 hours. Yes it is a step up from sham arbitrations, but it still seems very disheveled. Small claims courts are almost all staffed by referees in major courts now (NOT judges), many of whom do not know much about the law in any given area (most are older veteran attorneys who specialized in 1 area and got the job as a public service/pro bono commitment), are in private practice, and ultimately I believe are just as biased as some arbitrators might be. There will be a ref that will take any claim for a creditor, and a ref who will toss out a creditor's good claim just for the heck of it.

We are FAR more of a credit-using and debt-oriented society in terms of consumption today than even in the 1980s. With that comes defaults, nonpayment, and litigation. We need to rework how consumer debt arbitration works, not stick our heads in the mud and hope our perennially defunded court systems figure it out.