Mediation provides a systematic means by which to settle bankruptcy cases, including those that are complex or especially time-consuming. Everyone involved saves money, which can be especially important when the bankruptcy filing includes large corporations, or multiple claims that involve mass torts or class action lawsuits. Whether an individual is filing for bankruptcy or the bankruptcy filing is by a large company or corporation, mediation is one of the best tools for bringing about a fair and efficient resolution.

Mediation can be used in bankruptcy in one of two ways. It can be something that settles a single claim between a creditor and filer. Disputing parties agree to give mediation a chance to avoid court costs and other disadvantages of litigation. In most cases, bankruptcy courts are happy to allow mediation because it reduces the court’s role in the case.

Another way mediation is used in bankruptcy cases occurs when there is a larger, more complex bankruptcy case. When there is a large group of claims in a single bankruptcy case, mediation creates an orderly process that provides early resolution. This eliminates the need for unnecessary costs accumulated during the discovery process, as well as motions and lengthy trial preparation. The time and expenses of preparing for mediation are much less than the costs of a trial. Overall, the systematic approach of mediation shortens the length of the entire bankruptcy proceeding.

Though benefits of using mediation to settle bankruptcies are beneficial to everyone involved, there are some disadvantages, especially because it is a fairly new concept. Some attorneys and clients are initially resistant to the process, which is the case in many types of mediation. For some, it just seems too good to be true. Usually, education and clarification are enough to convince them to give bankruptcy mediation at least a chance.