Everything You Need To Know About Arkansas Debt Collection Laws

State and federal debt collection regulations will govern you if your account is placed in collections. When it comes to borrower protections, things are a little different for residents of Arkansas.

The FDCPA does not apply to creditors in Arkansas. Therefore, you are only covered by the law if the lender employs a third-party debt collection agency to collect the debt.

Arkansas debt collection laws 

 The State Board of Collection Agencies may revoke, suspend, or refuse to provide a license to a debt collection agency if they are found:

  • Making false or misleading statements on an application; 
  • Selling or transferring ownership of the agency; 
  • Helping an unlicensed person operate a collection agency; 
  • Making false or misleading statements on an application; 
  • Disseminating any printed material that is designed to resemble or be similar to official paperwork, such as court documents or forms used in civil or criminal cases;
  • Selling or threatening to sell any claim to enforce payment of such claim, or promising to do so to solicit claims, unless the licensee has acquired the claim as an assignee for the benefit of creditors or unless the licensee is acting following a court's decision;
  • Using any unethical techniques or illegal means or techniques for collecting;
  • Using foul language, obscenities, or vulgarity when gathering evidence;
  • Writing or calling a debtor at their place of employment unless a sincere effort has been made to get in touch with them by mail at their regular residence and the mail has not been returned and no response has been received; or
  • Making threats of physical harm or using violence when gathering claims.
  • Using any tactics outside American postal laws and regulations to collect or attempt to collect.

What if the debt collection agencies break laws in Arkansas?

(a) (1) The State Board of Collection Agencies will order a hearing to be held after receiving evidence of any infraction.

(2) At least twenty (20) days before the hearing, all interested parties must be informed of the time and location of the hearing.

(3) The board can call witnesses, question them in person, obtain information through affidavits and depositions, and demand business records relevant to the allegations against any accused offender.

What is exempt from debt collection in Arkansas?

The FDCPA does not apply to creditors in Arkansas; therefore, you are only covered by the law if they employ a third-party collection agency to collect the debt.

Properties are protected for up to $2,500 in value when you look at the homestead exemption in the state, which establishes how much equity in your property cannot be subject to a judicial decision. Additionally, car equity is only protected in Arkansas for up to $1,200.

You would be exempted up to $800 (if single) or $1,250 (if married) if your bank received a court order to levy your account; anything over that would be subject to collection. This law applies to any bank account with your name, even if you are a co-account holder. Therefore, those who think their accounts could be susceptible to levies should withdraw from joint accounts to preserve their assets.

Then there are wages: Arkansas citizens are well protected from wage garnishment, which is when money is deducted from your paycheck rather than your bank account. There is a 75% exemption for residents of Arkansas. After necessary deductions, including federal, state, and local taxes, are deducted, along with Social Security, unemployment, and disability taxes, the percentage is computed.

Except for specific issues like paying back arrears in taxes or child support, voluntary deductions like retirement and health savings account (HSA) payments are excluded. The final 25% would be deducted from each paycheck until the loan is paid off. Nevertheless, because it is such a small percentage, the 75% exemption does reduce the likelihood that a debt collector will sue you.

You should also be aware of another exception to the wage-garnishment rule. If your weekly take-home pay is $217.50 or less, your wages cannot be withheld even if your debt is turned over to collectors.

How long does a creditor/debt collection agency have to sue you in Arkansas?

Creditors can file a lawsuit against you within the statute of limitations (SOL) period. They can also file a lawsuit after the SOL period is over. But the court will regard the debt s time-barred.

The statute of limitations in Arkansas is five years from the date of default for written contracts. However, a written acceptance of default or partial payment will restart the statute of limitations period.

Credit card debts are subject to the five-year statute of limitations that governs written contracts, and this is so because agreements involving credit cards are based on written contracts.

Domestic and foreign judgments have a ten-year SOL period beyond which they can be extended.

The SOL period for medical debt is two years, and auto loan debt is four years.

Can you go to jail for debt in Arkansas?

Almost 30% of states in the United States permit debtors to go to jail for unpaid debt. The steps involved in being detained for outstanding debt are as follows:

You fail to pay your bill in the first step, the creditor sues you in the second, skip court in the third, and the court directs you to pay the debt or appear in court for a hearing in the fourth.

In the fifth step, you decide to disobey the court's order and act accordingly. In that case, you can be sent to jail in contempt of the court's order.

Can debt collectors garnish wages in Arkansas?

The federal wage garnishment statute is typically followed in Arkansas. When an Arkansas creditor garnishes your pay, it can only take a maximum of 25% of your earnings in most cases. Until the debt is paid in full or you take action to stop the garnishment, such as filing a claim for an exemption with the court, the creditor will continue to deduct money from your paycheck.

What debt collectors won't tell you in Arkansas?

Debt collectors may harass you until you pay the whole amount owed, but they are typically allowed to negotiate a reduced payment of 15 to 35 percent less than the total debt.

Debt collectors won't voluntarily let you know that the debt's statute of limitations might have already passed. Before knowing that information, it is crucial to refrain from making any promises to the caller.

Debt collectors cannot call you while you are at work. You may be able to claim under the Fair Debt Collection Practices Act if they continue to call after you have instructed them to stop. The collector may be liable for your costs, legal expenses, and damages. A claim under the FDCPA has a one-year statute of limitations from the alleged date of a collector's breach.

Debt collectors won't inform you that the FDCPA also forbids them from calling between 9 p.m. and 8 a.m., using profanity, or threatening to have you arrested.

The final verdict

People in Arkansas who are heavily in debt do have debt relief options for assistance. Additionally, the law offers some rights to people who must deal with collections, protecting debtors from outside collection agencies and easing the burden on those concerned about wage garnishment. The ideal debt relief strategy will ultimately depend on your specific situation, but attending a No-obligation Free Debt Counseling session, for example, can help you determine the best option.

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