Online Dispute Resolution Changes Little in Terms of Collection

Online Dispute Resolution Changes Little in Terms of Collection

Courts around the country are gradually signing on to something known as online dispute resolution (ODR). No doubt that ODR is changing the way civil cases are managed at both the county and state levels. But in terms of post-settlement debt collection, ODR changes very little.

ODR is designed to streamline the way parties settle disputes. But if a settlement includes any sort of monetary exchange, the financial transaction takes place separate from the ODR environment. Therefore, collection efforts remain unchanged. Creditors still rely on the same processes and strategies while they hope for full cooperation from their debtors.

More About ODR

The best way to understand ODR is to think of it as an online courthouse. ODR is essentially a digital portal through which individuals and organizations access the judicial system. It is utilized by county and state courts to help settle disputes without forcing parties to go through traditional court procedures.

According to the National Center for State Court, court related ODR is distinct in three ways:

1. Exclusively Online – ODR is not merely a platform through which litigants can file documents. It is a complete online platform through which the entire resolution process can be facilitated. Parties do not interact with the court in any other way outside of ODR.

2. Assisting Litigants – The point of court-related ODR is not to support court decision making processes. Rather, it is to help litigants resolve their disputes so that jury and bench trials can be avoided.

3. Court Hosted – Court-related ODR is completely separate from private alternative dispute resolution (ADR) services that might be offered online. It extends judicial branch alternative dispute resolution services into the digital space to make them more accessible to litigants.

So, what can it do for litigants to keep them out of the courtroom? ODR can be utilized as a case management tool for claim submissions, exchanging documents between parties, and even communicating between them. Court-related ODR also acts as:

  • A resource facility (legal guidance, FAQs, etc.).
  • A negotiation platform.
  • A platform for mediation.
  • A technology-assisted adjudication platform.

The idea of collections comes in when an ODR platform is used to adjudicate litigation. Once a case is settled and a monetary award is established, it becomes the creditor’s responsibility to address collection. As previously stated, collection occurs entirely outside the ODR sphere.

Working Things Out Amicably

In a perfect world, settling a dispute through ODR would lead to the parties amicably working out the details of the associated financial transaction. Perhaps the parties find common ground through a monthly installment plan that allows the debtor to gradually pay the award in full. Meanwhile, the creditor no longer needs to pursue further collection efforts.

When the parties cannot work things out, it is back to square one with collections. The creditor can continue to pursue collection or turn it over to an attorney or collection agency. Note there are some collection agencies who specialize exclusively in judgments. Utah-based Judgment Collectors is one such agency.

Unfortunately, court related ODR doesn’t prevent debtors from doing what they can to avoid paying. It does not prevent debtors from hiding assets, skipping town, or being uncooperative in any other way. Collections remain as difficult as ever regardless of whether or not court related ODR facilitated a settlement.

This is not to say that ODR isn’t worth utilizing. To the contrary, there are numerous benefits to staying out of the courtroom. It is just that one of those benefits is not making the collection process any easier. ODR has very little impact on collections, especially when debtors are of a mind to not cooperate.