What is arbitration?

Question

have an old verizon account that went to collection 3 years ago. I just got something today saying that the current owner of the account is moving forward with the arbitration process and that I have till 08-06-08 to arrange a satisfactory resolution. If not, it says they will file a claim with the american arbitration association.

What does claim mean? What happens to me and what's the process?

Can you explain In detail, please, if you don't mind

Answer 1

Basically, it means that rather than take you to court they are going to an arbitrator, who will listen to both sides of the dispute and make a ruling that both sides will agree to.  If you check your original contract there is usually a clause that allows Verizon to go this route rather than the courts as the courts are too expensive.

Arbitration:

Arbitration, a form of alternative dispute resolution (ADR) is a legal technique for the resolution of disputes outside the courts, wherein the parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound. Arbitration in the United States and in other countries often includes alternative dispute resolution (ADR), a category that more commonly refers to mediation (a form of settlement negotiation facilitated by a neutral third party). It is more helpful, however, simply to classify arbitration as a form of binding dispute resolution, equivalent to litigation in the courts, and entirely distinct from the various forms of non-binding dispute resolution, such as negotiation, mediation, or non-binding determinations by experts. Arbitration is, today, most commonly used for the resolution of commercial disputes, particularly in the context of international commercial transactions.

Arbitration can be either voluntary or mandatory and can be either binding or non-binding.