Sarah Edwards | January 10, 2023
Summary: If you’re facing a debt lawsuit in Arkansas, you’re probably wondering how to avoid going to court. You can settle a debt at any stage of the debt lawsuit process. Just be sure to respond to the lawsuit, send a settlement offer to begin negotiations, and get the settlement agreement in writing. SoloSettle can help you with each of these steps and more.
Consumer debts are a fact of life in the United States. Most people have multiple debts, including credit cards, automobile loans, and mortgages. With all those obligations, it’s easy to fall behind.
If a consumer cannot get their payments back on track, their creditor may decide to take legal action against them. If successful, a debt collection lawsuit may result in a judgment. A judgment allows the creditor to take more severe actions against a consumer, such as garnishing their wages or freezing their bank account.
If you’re facing a debt lawsuit in Arkansas and cannot afford to repay the debt in full, you can attempt debt settlement. Debt settlement allows you to resolve the debt for a lesser amount than the total value of the obligation, avoid a judgment, and stop future collection efforts.
There are three steps you’ll need to follow if you plan to settle a debt before your court date.
When a creditor begins the legal process against you, they’ll file a Complaint with your local court and send a copy to you. The Complaint will list the reasons for the lawsuit, such as your nonpayment of an obligation. It should also include the total value of your debt plus any accumulated interest and fees.
Many people make their first mistake by failing to respond to the Complaint. Even though you plan to settle your debt, you should still file a response, known as an Answer. An Answer is your defense to the lawsuit and prevents the judge from granting a default judgment against you.
You have 30 days to respond to a debt lawsuit in Arkansas and avoid a default judgment. If you don’t file an Answer in time, and your efforts to settle the debt are unsuccessful, you have no protection from the lawsuit against you. You can use various defenses in an Answer, such as arguing that you don’t have a business relationship with the creditor or that they haven’t provided proper validation of your debt.
If you don’t know where to start in drafting an Answer, we’ve prepared a video that you can review. The video describes how the Answer process works and what you should include in it:
Your next step involves making an initial offer to your creditor or debt collector.
You should determine how much you can afford to pay in a settlement. Assess your savings and any money coming in over the next few weeks. Try to collect at least 60% of the value of your debt.
For instance, if you owe $5,000 to a creditor, you might begin with an offer of $3,000 to settle. If that amount is out of reach, consider selling a few items you don’t need or getting help from friends and family.
Once you start negotiating with your debt collector, they may not accept your first offer. They’ll probably counter with an offer of their own. Sometimes, negotiations can go through several rounds before you’re able to reach an agreement.
Make sure not to accept any offers that you can’t afford to repay. If you do, and you don’t fulfill your obligations, the creditor will likely restart the legal process against you — but this time, they won’t accept a settlement.
Before transferring your payment to the creditor, make sure to get your settlement agreement in writing. A written contract ensures that you and your debt collector have a record of the deal and its terms. You’ll be able to refer to it if you need to.
Your contract should list how much you’ll repay, how you’ll pay it, and when it is due. It should also stipulate that the settlement waives any rights of the creditor to pursue the remaining balance from you through any means.
You can prepare the contract before the settlement process and fill in the applicable information once you have a deal. We recommend that you ask your creditor to notarize the agreement. Notarizing the agreement requires legal witnesses to the execution of the document and protects you if the creditor tries to back out of the contract.
Here’s a debt settlement agreement example, for your reference, with a preview attached below:
Now, let’s consider an example of how to settle a debt in Arkansas.
Example: Elaine receives a notice of a debt lawsuit against her. She owes Barclays $2,000 for an old credit card she’s forgotten about. Unfortunately, Elaine doesn’t have $2,000 to pay Barclays, but she wants to avoid a court judgment. First, Elaine responds to the lawsuit with an Answer, which she sends to the creditor and her local Arkansas court. Next, she uses SoloSuit to send Barclays an offer of 60% of the debt for a settlement, or $1,200. Barclays accepts Elaine’s offer, and she transfers the money after obtaining a signed settlement agreement. Once Barclays receives the money, it drops the case against her and reports her account settled to the credit reporting agencies.
Arkansas abides by the Fair Debt Collection Practices Act (FDCPA), a federal law that governs the actions creditors and debt collectors can take when attempting to collect a debt. Under the FDCPA, creditors and debt collectors cannot harass or abuse debtors. Specific actions, including the below, are forbidden:
Arkansas also provides a statute of limitations that caps the time a creditor can pursue a lawsuit against a consumer for nonpayment of debt.
Under AR Code § 16-56-111 (2017), creditors have five years to pursue debts from written contracts. AR Code § 16-56-105 (2010) limits legal action for oral debts to three years, and AR Code § 16-56-106 (2010) caps the collection of medical debts to two years.
On top of these debt collection laws, the Federal Trade Commission has recently amended the Telemarketing Sales Rule to expand debt settlement regulations to all debt relief organizations and companies. All 50 states, including Arkansas, are governed by this Rule as it relates to debt settlement practice.
Under the new Rule, any company that provides debt relief services, namely debt settlement companies, cannot:
SoloSettle, powered by SoloSuit, uses a tech-based approach to help consumers like you settle their debts. Our software sends and receives settlement offers on your behalf so you don’t have to stress about communicating with sketchy debt collectors.
On top of that, SoloSettle helps you manage your settlement agreement documents and sends payments in your name so you don’t have to give up your financial information.Further, SoloSettle ensures that proper legal language is used to make you sound professional and to protect your rights.
Many consumers prefer SoloSettle over traditional debt settlement companies for a few reasons:
If you’re still not convinced, let a real SoloSettle customer clue you in:
“I'm very thankful for SoloSettle.. Having a third party negotiate the settlement was instrumental in resolving this case and saved me from two giant headaches: 1) I didn't have to deal with the plaintiff's lawyer and 2) I didn't have to go to court. I also love that the payment was processed through SoloSettle. I was nervous about sharing my personal financial data with the other side, but SoloSettle protected that for me. I hope I never get sued again, but if I do, I would use SoloSettle again in a heartbeat.
SoloSettle really saved me a ton of time and heartburn and kept me from having to be my own lawyer in court.”
You can contact your creditor via phone, email, or letter to start the debt settlement process. We advise using email since it’s quick and provides you with a written record of the communication.
However, if you’d prefer a conversation with your creditor or debt collector, you can call them. If you take the phone route, you should record the discussion so that you have it to refer to if the creditor tries to renege on your settlement deal.
Arkansas requires only one party to consent to a recording of your phone call under AR Code § 5-60-120. You’ll be the party giving consent.
Here are a few of the top inquiries we hear concerning debt settlement in Arkansas.
The more you offer in a debt settlement, the more likely your creditor will accept a deal. We recommend starting with 60% of your debt. If you cannot afford that much, offer what you can. Your creditor will consider your offer and decide whether it’s appropriate.
Yes, it is entirely possible to handle your own debt settlement. Before doing so, you should learn as much as possible about the process. SoloSuit has lots of handy guides concerning debt settlement and debt relief.
It’s always best to pay off your debts rather than settle them. Paying off your debt is more favorable to your credit report and score. However, settling your debt can protect you from legal action and eliminate further collection activities from a creditor.
SoloSuit has other guides to help you if you’re considering debt settlement in Arkansas. Here are a few of our most popular articles on the subject:
Even if you’re facing a debt lawsuit, settling the obligation before your court date is still possible. Simply file an Answer to your creditor’s Complaint, then start the negotiation process. Make sure to get your agreement in writing before transferring any money.
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
Here's a list of guides for other states.
Being sued by a different debt collector? Were making guides on how to beat each one.
You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now are are just look for support, we're here for you.
Is your credit card company suing you? Learn how you can beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.
Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.
"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather