A Guide to Mediation for Credit Pros

By Michael C. Dennis. CPC, CCP, CBF, MBA

Mediation is a remarkably effective and increasingly favored method for dispute resolution for credit pros. At its core, mediation relies on the guidance of an impartial and neutral third-party, known as the mediator, whose primary objective is to facilitate constructive dialogue between the disputing parties.

This process is designed to steer the involved individuals or entities toward a mutually beneficial and sustainable resolution of their conflict. A key distinction between mediation and arbitration lies in the outcome; unlike arbitration, where a binding judgment is rendered by the arbitrator, mediators consciously strive to avoid imposing their own opinions or judgments regarding the substantive merits of each party's respective case. Instead, their focus remains firmly on fostering communication and identifying common ground.

In the context of mediation, the buyer and seller involved in a dispute or disagreement actively engage with the mediator to explore a diverse range of potential options and creative solutions aimed at resolving their differences. The ultimate goal of this collaborative exploration is to achieve a mutually agreed-upon and mutually beneficial settlement that effectively addresses the concerns and interests of all parties involved.

Successfully reaching such a settlement prevents buyers and sellers from becoming entangled in more formal, adversarial, and considerably more expensive and time-consuming dispute resolution methods, such as litigation in the courts.

Mediation can occur in two primary ways: it may be contractually mandated as a pre-requisite for pursuing other legal avenues, or the parties themselves can voluntarily agree to engage in the mediation process as a proactive step towards resolving their conflict.

Clearly, the mediator occupies a pivotal role throughout the entire mediation process. This central position necessitates that individuals serving as mediators possess appropriate and specialized training in conflict resolution techniques, coupled with relevant and practical industry experience within the specific context of the dispute, in this case, credit matters.

Mediators may be called upon to skillfully assess the underlying strengths and weaknesses of each party's position, not to render judgment, but to better understand the nuances of the conflict and guide the discussion effectively. Consequently, the qualifications, expertise, and interpersonal skills of the mediator are absolutely crucial determinants of the mediation's ultimate success and the likelihood of achieving a satisfactory resolution.

In summary, mediation is a tool for resolving conflicts in an amicable and collaborative manner. It fosters an environment conducive to finding common ground. Also, mediation offers the significant potential for avoiding the substantial financial costs, emotional strain, and procedural complexities frequently associated with more formal dispute resolution mechanisms such as litigation or arbitration.

Ultimately, the success of mediation hinges on the mediator's ability to effectively facilitate communication, identify underlying interests, and guide the parties toward reaching a mutually satisfactory resolution to their problem, thereby potentially preserving relationships between the creditor and the customer.