Arkansas Debt Collection and Debt Relief: Unlocking Financial Freedom

Guy Benhanan
May 22, 2023

If you're facing financial difficulties due to debt in Arkansas, you're not alone. According to a recent study conducted by WalletHub, the average household in Little Rock, Arkansas, has a credit card debt of $10,527. Additionally, the state has one of the lowest average salaries in the country, with workers earning an average of $46,500 annually. These figures, coupled with the rise in inflation and housing costs over the past year, can make it challenging for the typical Arkansas resident to make progress in paying off their debt.

Fortunately, there are laws in place at both the federal and state levels to protect consumers who are indebted. Whether you're struggling to make minimum payments or facing debt collectors' relentless pursuit, these laws offer safeguards and support.

Arkansas Debt Collection Laws

Arkansas Debt Collection Laws

In 1977, the federal government passed the Fair Debt Collection Practices Act (FDCPA) to provide specific protections to consumers who have outstanding accounts with lenders or debt collectors.

The FDCPA includes several provisions that benefit consumers. One important provision allows you to request written validation of the debt within 30 days of receiving a collection notice from debt collectors. You can accomplish this by sending a letter known as a Debt Validation Letter.

When you request debt validation, the debt collector is obligated to provide you with certain information related to the debt, including:

  • The amount of the debt
  • The original creditor's name and address
  • Verification of the debt, which may include a statement from the original creditor
  • Confirmation that the debt belongs to you as the individual

The validation process is crucial as it helps clarify any misunderstandings between the consumer and the debt collection agency. For instance, if the debt is held by someone else, the debt collection notice would be in error, and the debt collection agency would not be able to validate it.

In some cases, individuals may become victims of identity theft, where their personal information is stolen through various means like hacking or stolen documents or bank account. Identity theft can involve someone fraudulently applying for a loan under your name and not intending to repay it.

Receiving a debt collection notice might alert you to the possibility of your identity being compromised. If you suspect identity theft, you should report it to the police and credit bureaus. Unfortunately, it may take time to resolve credit report issues resulting from identity theft.

Lastly, the FDCPA protects individuals from abusive practices by debt collectors. The act defines various actions as abusive, and debt collectors are prohibited from engaging in them. Some examples of FDCPA violations include:

  • Repeatedly calling a person throughout the day or allowing the phone to ring continuously
  • Using profanity or vulgar language when discussing the debt with the consumer
  • Making false threats of legal action
  • Impersonating someone else while attempting to collect the debt
  • Misrepresenting the actual amount owed
  • Contacting you before 8 am or after 9 pm by phone
  • Contacting you at your workplace when your employer prohibits such communication
  • Disclosing your debt to family members, friends, or co-workers

While these examples highlight a few prohibited practices by some debt collection companies and collectors, there are numerous others. If you believe that a debt collector is illegally harassing you, you can file a complaint against them with the Consumer Financial Protection Bureau or the Better Business Bureau.

What state laws protect me from debt collectors in Arkansas?

Statute of Limitations Arkansas Debt

In addition to adopting the Fair Debt Collection Practices Act (FDCPA), Arkansas has implemented statutes of limitations for different types of consumer debt. These statutes of limitations in Arkansas debts define the maximum period during which debt collectors can legally pursue you for an overdue debt. If you receive collection letters for a debt that was incurred several years ago, the collection of that debt may be barred by the statute of limitations set by state law.

It's important to note that even if a debt is time-barred, meaning the statute of limitations has expired, you still technically owe the debt. The collection agency can continue to contact you and list the debt as outstanding on your credit report. Responding to any of their communication or making a payment towards the debt can reset the statute of limitations, allowing the agency to potentially pursue legal action.

Here are some examples of the limitations period under Arkansas Statute of Limitations on debt:

Arkansas Statute of Limitations on Debt
Type of Debt Statute of Limitations
 Credit Card  5 years
 Medical  2 years
 Mortgage  5 years
 Auto Loan  4 years
 State Tax  10 years

Please note that this information is sourced from FindLaw and serves as a general guide. It's advisable to consult with a legal professional or conduct further research to ensure accuracy and applicability to your specific situation.

Once the applicable time limit has passed for a particular type of debt, you generally cannot be sued for repayment, unless you reset the statute of limitations by acknowledging the debt or making a payment toward it.

What are the types of debt relief can I obtain in Arkansas?

Arkansas debt relief

Debt Consolidation in Arkansas

Debt consolidation offers a practical solution for managing multiple debts. With this approach, you can obtain a loan from a reputable debt consolidation company to pay off all your creditors at once.

However, it's important to note that securing a loan may require a decent credit score. By consolidating your debts, you can potentially save money by reducing interest rates and simplify your repayments with a single monthly payment to your debt consolidation lender account.

Debt Settlement in Arkansas

Debt settlement is another viable option for eliminating your debts. You have two choices: negotiate a reduced balance with your creditors directly or seek assistance from a professional debt settlement agency.

These agencies have the expertise to negotiate on your behalf, often achieving a substantial reduction of 30% or more on the total debt owed. This means you could potentially settle your debts for as little as 70% of the original amount. Keep in mind that these debt settlement companies and agencies typically charge a fee for their services, and the process may have a negative impact on your credit score.

Filing for Bankruptcy in Arkansas

Bankruptcy should be considered as a last resort for individuals facing severe financial hardships with no other viable options. There are two main types of bankruptcy available to everyday consumers in Arkansas: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy provides a complete discharge of consumer debt. However, you must meet specific income requirements to qualify for this option.

Chapter 13 bankruptcy involves creating a repayment plan to satisfy a portion of your debt. This option is suitable for individuals with assets they wish to protect, such as a home. Both types of bankruptcy will significantly damage your credit score, potentially making it challenging to secure loans or find housing in the aftermath.

Make Use of Arkansas Debt Relief Programs

If you're an Arkansas resident, you may be eligible for federally-funded programs designed to assist individuals in improving their financial stability. Here are some notable Arkansas debt relief programs:

  1. Transitional Employment Assistance (TEA): Similar to TANF, TEA offers time-limited cash assistance to families with children. It also provides work training and self-sufficiency courses to parents.
  2. Arkansas Work Pays: This program supports former TEA participants with additional services and provides a monthly cash assistance payment.
  3. Rural Community Grant Program: Residents of small towns with populations under 3,000 and unincorporated rural areas may qualify for grants up to $15,000.
  4. ARKids First: Low-income households with children in Arkansas can benefit from this program, which offers health insurance coverage for eligible kids.

These programs are just a few examples of the Arkansas debt relief assistance available to the state's residents.

How to Respond Promptly to Debt Collection Notices?

When you receive a debt collection notice, it is crucial to respond promptly, regardless of whether or not the statute of limitations has expired. This is especially important if you want to avoid a default judgment.

Default judgments can result in wage garnishment, frozen assets, and liens on your property, so it's important to take action to prevent these consequences. However, when responding to debt collections call, it is essential to be aware of your rights and avoid admitting responsibility for the debt.

Do Not Ignore the Summons

Ignoring your debts can lead to a lawsuit being filed against you. Unless you can prove that the statute of limitations has expired, you will be required to respond and appear in court. Even if the statute of limitations is still in effect, it may be advisable to explore options such as setting up an installment plan to minimize the impact on your credit report.

Send a Cease and Desist Letter

If you wish to stop receiving collection communications, you can send a cease and desist letter to the debt collector, requesting them to cease contacting you. This should put an end to further debt collection agencies' attempts. It is recommended to keep a copy of the letter for your records.

Request Debt Validation

Every creditor or debt collector is obligated to provide you with debt validation. After initial contact, they are legally required to send you a "validation notice" within five days. This notice should include information such as the amount you owe, the name of the creditor, and instructions on what to do if you believe you do not owe the debt.

Please note that the information provided is general in nature and not intended as legal advice. If you require specific guidance regarding debt collection matters, it is advisable to consult with a legal professional.

Conclusion: Rights and Resources in Debt Collection

debt free fist

Debt collection in Arkansas is a complex field, with numerous laws and regulations protecting consumers. It's important to stay informed, track your payments, and consult with professional debt collection agency if you're unsure about the debt collection process. Remember, you have rights and resources to help you navigate, such Qade Collections.