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Debt collection in Arkansas is governed by both federal and state laws, with the Fair Debt Collection Practices Act (FDCPA) setting national standards and the Arkansas Fair Debt Collection Practices Act (AFDCPA) adding state-specific rules. Key points include:
Understanding these laws is crucial for compliance and maintaining the enforceability of debts. Non-compliance risks fines, legal challenges, and diminished portfolio value.
Arkansas Debt Collection Laws: Statute of Limitations and Key Requirements Guide
Debt collection in Arkansas operates under both federal and state laws. The Fair Debt Collection Practices Act (FDCPA) sets the national framework, while the Arkansas Fair Debt Collection Practices Act (AFDCPA), enacted in 2009, adds specific state-level rules. Together, these regulations define what debt collectors can and cannot do, ensuring consistent standards across federal and state levels.
Arkansas law closely mirrors federal guidelines. For instance, Arkansas Code Annotated § 17-24-203 mandates that the State Board of Collection Agencies (SBCA) interpret state laws in line with federal practices:
The board shall use, to the greatest extent possible, the interpretation and construction of the Fair Debt Collection Practices Act and any other applicable portions of the debt collection laws of the United States in interpreting and applying this chapter.
The FDCPA imposes strict boundaries on debt collection practices, which are crucial for collectors and debt portfolio traders operating in Arkansas.
Under the FDCPA, collectors are limited in their communication methods. Calls are restricted to between 8:00 a.m. and 9:00 p.m., and workplace calls are banned if the employer disallows them. Collectors must clearly state that their communication is an attempt to collect a debt and are prohibited from using threats, profane language, or repeated calls designed to harass.
The law also bans deceptive practices. Collectors cannot misrepresent the amount owed, falsely claim to be attorneys or government officials, or threaten legal actions they don’t intend to pursue. Additionally, debtors have the right to stop all communication by providing written notice, although collectors may still notify them of specific legal actions.
Arkansas builds upon federal laws with additional regulations to curtail unfair collection practices.
The AFDCPA explicitly prohibits harassment, false statements, and other unfair methods. State-specific rules include bans on "deadbeat lists", a requirement to attempt contact via home mail before workplace calls, and a cap of 50% of the collected amount for fees.
The Arkansas State Board of Collection Agencies (SBCA) enforces these regulations through investigations and penalties. For example, in June 2023, the SBCA issued enforcement orders against AB&T Consultants, LLC, following similar actions in 2021 against Elite Credit Services and Hillcrest Davidson & Assoc. Violations can lead to fines ranging from $50 to $500 per day, while unlicensed activity may result in a $10,000 civil penalty. These enforcement actions highlight the compliance risks for debt portfolio traders, which will be explored further in later sections.
| Regulation Type | Federal (FDCPA) | Arkansas State Law |
|---|---|---|
| Licensing | No federal license required | Mandatory license from SBCA |
| Bonding | No federal bond requirement | $10,000–$50,000 bond required |
| Fee Limits | Not specifically capped | Maximum 50% of collected amount |
| Workplace Contact | Prohibited if employer disallows | Prohibited until home mail attempt fails |
If you're planning to collect debts from Arkansas residents - whether you're a traditional collector, debt buyer, or a commercial B2B collector - you’ll need a license from the Arkansas State Board of Collection Agencies (ASBCA).
"If you are going to attempt to collect from an Arkansas resident, you must first obtain a license." – Arkansas State Board of Collection Agencies
The licensing process involves an annual fee of $125, plus an additional $20 per collector. Agencies must also secure a surety bond ranging from $10,000 to $25,000. Operating without a license can lead to daily fines, and agencies that have already contacted Arkansas residents without a license can apply for retroactive licensure. However, this requires paying a $10,000 civil penalty upfront.
Every collector and solicitor employed at a licensed agency must register with the ASBCA, including any aliases they use. This rule applies to all staff at the licensed location, even if they aren't directly working on Arkansas accounts. Agencies must also appoint a manager who meets specific requirements: they must either have at least one year of recent management experience or pass a written exam, in addition to meeting creditworthiness standards.
In-house collection departments also need a license if they operate under a different name from their main business. For instance, if "Smith Family Health" collects debts under the name "Smith Medical Collections", it must obtain a collection agency license. However, businesses collecting their own debts under their own name are exempt from this requirement. These registration rules apply equally to all operating locations, whether based in Arkansas or elsewhere.
Each physical location in Arkansas must have its own license. There’s no distinction between main offices and branch locations. Out-of-state agencies are held to the same standards as those based in Arkansas, with no exceptions based on geography.
"Arkansas law does not distinguish between debt buyers and traditional collection agencies." – Arkansas State Board of Collection Agencies
Remote work setups are allowed, but agencies must ensure proper oversight, such as call recording and supervision from the licensed central office. Without adequate oversight, remote locations may require their own licenses. To simplify the process, the ASBCA now uses the Enterprise Licensing & Permitting (ELP) portal for all applications and renewals. Licenses must be renewed annually between April 1 and June 30, and late renewals are not accepted after the deadline. Agencies that miss the deadline but continue operations are subject to the same daily fines as unlicensed entities.
Adhering to these licensing rules is critical - not only to avoid hefty penalties but also to maintain the value of debt portfolios in the market.
For debt portfolio traders handling Arkansas accounts, understanding the statute of limitations is a must. This legal timeframe determines how long creditors or collectors can sue to recover a debt. Once the period expires, the debt becomes "time-barred", meaning legal action is no longer an option. However, creditors can still pursue collection through non-legal means. This timeline is critical when assessing the collectability and risk of a debt portfolio.
"Once this timeframe expires, creditors lose the right to sue the debtor for a court‐enforced judgment. However, it's important to note that the debt itself isn't erased - creditors may still attempt to collect through non‐legal means." – Debt Collectors International
The clock starts ticking on the date of the last payment, when the account became delinquent, or when a contract was breached. Certain actions, like making a partial payment, acknowledging the debt in writing, or promising to pay, can reset the clock. Additionally, the timeline may pause if the debtor leaves Arkansas, files for bankruptcy, or is declared legally incapacitated.
Debts tied to written contracts - such as signed loan agreements or business contracts - generally have a 5-year statute of limitations in Arkansas. Promissory notes, depending on their terms, may fall under a 3-year or 5-year limit. It’s essential to confirm the type of agreement and the date of the last activity before acquiring portfolios, as unenforceable debt can pose significant risks.
For oral contracts, or verbal agreements without documentation, the statute of limitations is typically 3 years. Open accounts, like credit cards or revolving credit lines, also fall under a 3-year limit. These types of debts can quickly become legally unenforceable, so it’s wise to use monitoring tools to flag accounts approaching this deadline.
Court judgments in Arkansas can be enforced for 10 years and renewed if necessary. Medical debt, on the other hand, has a statute of limitations ranging from 2 to 5 years, depending on the agreement. Given the varying timelines, it’s crucial to act promptly to maintain the enforceability of medical debts.
When dealing with time-barred debt, transparency is key. While collectors can request voluntary payments, they must avoid suggesting legal action or implying that a court judgment is possible. For example, communications should clearly state:
"This debt is no longer subject to legal action as the statute of limitations has expired." – Tratta
Misleading consumers about the enforceability of time-barred debt can violate both the FDCPA and Arkansas state laws.
| Debt Type | Statute of Limitations | Examples |
|---|---|---|
| Written Contracts | 5 years | Signed loan agreements, business contracts |
| Oral Contracts | 3 years | Verbal agreements without documentation |
| Open Accounts | 3 years | Credit cards, revolving credit lines |
| Promissory Notes | 3–5 years | Signed repayment notes |
| Judgments | 10 years | Court-ordered recovery (renewable) |
| Medical Debt | 2–5 years | Based on the underlying agreement |
These statutes play a direct role in how debt portfolios are valued and managed in Arkansas. Properly understanding these timelines helps traders minimize risks and ensure compliance.
When it comes to debt collection in Arkansas, the law sets clear boundaries on what collectors can and cannot do. These rules aim to protect consumers while ensuring fair practices in the collection process.
Collectors are allowed to contact consumers only between 8:00 a.m. and 9:00 p.m. local time. Contacting a debtor at their workplace is generally off-limits unless the collector has already made a good-faith effort to reach the debtor at home by mail without success - and only if the employer doesn’t prohibit such communication.
Every interaction must be transparent. Collectors need to disclose their identity, the creditor’s name, and the name of their licensed agency. When speaking directly, the collector must also identify themselves. Discussions about the debt are strictly limited to the consumer, their attorney, a credit bureau, the creditor, or the creditor’s lawyer. Contacting third parties is only allowed to locate the debtor’s home or workplace, and even then, the scope of contact is tightly controlled.
"A debt collector may only contact a person between the hours of 8 a.m. and 9 p.m." – Arkansas Attorney General
Arkansas law, specifically Arkansas Code § 17-24-505, prohibits collectors from engaging in behavior that is harassing, abusive, or oppressive. Violations can lead to penalties of up to $500 per day per complaint. Here are some examples of prohibited actions:
The table below highlights some of these prohibited practices and their legal references:
| Prohibited Action | Legal Reference |
|---|---|
| Threats of violence or physical harm | A.C.A. § 17-24-505 |
| Use of obscene or profane language | A.C.A. § 17-24-307 |
| Repeated or continuous harassing calls | A.C.A. § 17-24-505 |
| Anonymous debt collection calls | A.C.A. § 17-24-505 |
| Publishing "deadbeat" lists | A.C.A. § 17-24-307 |
| Simulating government or legal forms | A.C.A. § 17-24-307 |
Additionally, Arkansas imposes a cap on collection fees, limiting them to 50% of the amount collected, with a minimum charge not exceeding $1.00 per account.
Debtors have the right to stop communication from collectors by sending a written notice. Once the collector receives this request, they are only permitted to contact the debtor to confirm the end of collection efforts or to notify them of specific legal actions, such as filing a lawsuit.
If a debtor believes their rights have been violated, they can report the incident to the Arkansas Attorney General’s office, the Federal Trade Commission (FTC), or the Arkansas State Board of Collection Agencies. Consulting a private attorney is also an option for exploring legal remedies.
These rules provide a clear framework for lawful debt collection while safeguarding consumer rights in Arkansas.
Debt buyers and sellers operating in Arkansas need to navigate the state's specific debt collection laws. These regulations directly influence pricing, risk assessment, and overall portfolio management strategies, making compliance a critical factor for success.
In Arkansas, both traditional collection agencies and debt buyers must secure a license from the Arkansas State Board of Collection Agencies (ASBCA) if they intend to purchase and collect on delinquent accounts from residents of the state. Unlike some states, Arkansas treats these entities the same under its licensing and bonding requirements.
Operating without a license leads to steep penalties. Agencies can face fines ranging from $50 to $500 per day of unlicensed activity. Additionally, to resolve prior unlicensed operations, an agency may need to pay a $10,000 civil penalty to gain "retroactive licensing." Beyond financial penalties, unlicensed debt buyers may encounter legal challenges that render their portfolios unenforceable in court.
State law also caps collection fees at 50% of the amount collected. Any agreements exceeding this threshold are deemed void. Buyers should carefully examine fee contracts to ensure compliance and avoid inheriting legal risks.
The statute of limitations plays a pivotal role in determining the value of debt portfolios. Open accounts in Arkansas are subject to a 3-year limitation, while written contracts have a 5-year limit. Naturally, portfolios containing debts tied to written contracts tend to hold greater value due to their extended enforceability.
Arkansas law also permits debt revival. A partial payment from a debtor resets the statute of limitations, effectively restarting the collection window. This makes portfolios with recent partial payments more attractive to buyers, as they offer a renewed opportunity for legal collection. Thoroughly reviewing account histories is essential to identify these opportunities.
To properly value a portfolio, buyers should confirm the existence of physical or digital written contracts. Without such documentation, debts may default to the shorter 3-year limitation for open accounts. Additionally, Arkansas's garnishment rules - allowing exemptions of $500 for heads of family and $200 for single individuals - can enhance the valuation of judgment-eligible debts.
| Debt Type | Statute of Limitations | Impact on Valuation |
|---|---|---|
| Open Accounts | 3 years | Lower value; shorter collection window |
| Written Contracts | 5 years | Higher value; extended enforceability |
| Sale of Goods (UCC-2) | 4 years | Moderate value; industry-specific |
| Domestic Judgments | 10 years (Renewable) | Highest value; long-term enforceability |
Platforms like Debexpert simplify the complexities of trading debt portfolios in Arkansas by offering tools that address the state's regulatory requirements. For instance, the platform ensures that all participants hold valid ASBCA licenses, reducing the risk of unlicensed activity violations.
Debexpert's automated tools also categorize debts based on Arkansas's statute of limitations - 3 years for open accounts and 5 years for written contracts - helping buyers avoid acquiring time-barred accounts. Additionally, its secure file-sharing capabilities maintain a verifiable chain of title, which is essential for compliance with the Arkansas Fair Debt Collection Practices Act.
The platform integrates Arkansas's 50% collection fee cap into its financial modeling, helping buyers avoid overpaying for portfolios based on unrealistic recovery expectations. Its analytics tools also highlight key statutory limits, while real-time communication features allow buyers and sellers to discuss account histories, compliance details, and any partial payments that may have restarted the statute of limitations.
For agencies managing remote teams, Debexpert includes features like recorded lines and management oversight, ensuring comprehensive compliance monitoring.
Understanding Arkansas debt collection laws isn't just helpful - it’s a key part of staying compliant and avoiding costly mistakes. The Arkansas State Board of Collection Agencies takes enforcement seriously, investigating complaints and even revoking or suspending licenses for violations.
For both creditors and collection agencies, these regulations have a direct impact on how debt portfolios are managed and valued. The statute of limitations plays a big role here: it’s 3 years for open accounts and 5 years for written contracts. This determines whether a debt is legally enforceable. As collectionagency.info puts it:
Knowing and abiding to the proper Arkansas debt collection laws is important for both creditors and collection agencies alike. There are debtor's rights attorneys who are just waiting for creditors or collection agencies to slip up.
Another critical rule? Agencies that don’t remit collected funds within the calendar month following collection lose their right to charge fees on those accounts. Staying compliant with licensing and payment protocols isn’t just about following the law - it’s about protecting your business operations.
Proper documentation is also a game-changer for debt portfolio valuation. Whether physical or digital, having the right proof is essential. Without written contracts, debts are subject to the shorter statute of limitations applied to open accounts. And don’t overlook the fact that partial payments can reset the clock on the statute of limitations - turning what might seem like a lost cause into a valuable asset. Finally, Arkansas’s garnishment exemptions - $500 for heads of family and $200 for single individuals - should always be part of your recovery planning.
To check if a collector is licensed in Arkansas, you can search the official roster of licensed collection agencies provided by the Arkansas Department of Labor and Licensing. Additionally, the Arkansas State Board of Collection Agencies oversees collection activities and keeps an updated list of licensed agencies. Make sure to use these official resources to confirm compliance with state laws.
In Arkansas, the clock on the statute of limitations for a debt can reset under certain conditions. If a debtor makes a partial payment or acknowledges the debt in writing, the time period starts over. This means creditors can take legal action even if the original statute of limitations has passed. Furthermore, Arkansas court rulings indicate that renewing a judgment can sometimes extend the limitations period, giving creditors additional time to enforce the debt.
If a debt collector reaches out to your employer in Arkansas, state laws strictly limit what they can say. Collectors are not allowed to share details about your debt or discuss it with your employer unless you’ve explicitly given permission or specific legal circumstances permit it. If you believe a collector has overstepped, make sure to document the incident, ask them to cease contact, and consider filing a complaint with the Arkansas Department of Labor and Licensing. You might also want to consult an attorney for further guidance.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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