How Can Bankruptcy Disputes Be Resolved Without Having To Go Into Litigation?
One option for resolving bankruptcy disputes is calling the other party to negotiate a settlement. However, there are some limitations.
First, an attorney is not permitted to contact a represented party directly. Instead, the attorney must contact the attorney for the represented party to initiate negotiations.
Second, negotiations will probably not take place unless at least one of the parties has commenced litigation because there is no reason to engage in negotiations unless there’s a pending dispute.
In the early stages of litigation, the attorneys must meet and confer. Usually, this takes place over the telephone and is not necessarily a face-to-face meeting. As part of the meet-an-confer, or indeed at any time, either side can propose a settlement. The process tends to be iterative, involving a give and take. If the parties agree to settle, then according to the bankruptcy rules they submit the settlement agreement to the Judge for approval. If the Judge approves it, the litigation ends. In addition, the Bankruptcy Court has a mediation program that can facilitate settlement. And at least in the Central District of California, the mediators provide their services on a pro bono basis.
Of course, the parties can settle before anyone even files a bankruptcy petition, which may obviate any need to file a bankruptcy.
If you’re in a dispute, telephone law may be a very effective way to resolve the matter because litigation tends to be expensive. One part of litigation is a process called discovery, which can be quite time-consuming. And with any litigation the parties incur fees at the hourly rates for the attorneys and whoever else is involved. In sum, the parties are usually better served if they settle.
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