Sarah Edwards | April 12, 2023
Summary: In Arkansas, creditors can garnish up to 25% of your disposable earnings if they win a debt lawsuit against you. SoloSuit can help you protect yourself.
If you’re facing a debt lawsuit in Arkansas, you’re probably wondering what the repercussions are if you lose your case.
A debt lawsuit is serious, and it’s not something to ignore. If you don’t defend yourself or try to resolve the matter before your court date, your creditor or debt collector will likely win a judgment against you.
This judgment gives a creditor or debt collector the right to garnish your wages until you fully repay your obligation. Wage garnishment can eat into a significant portion of your monthly pay. Depending on your earnings, the creditor may seize hundreds or thousands of dollars each month — money you probably need for other obligations.
You can stop wage garnishment before it starts by facing the issue head-on. In this article, we’ll walk you through Arkansas laws concerning wage garnishment and explain how to prevent it from happening to you.
The state of Arkansas does not specify any limitations on wage garnishment. Instead, it adheres to federal law 15 U.S.C. 1673, which states the maximum wage garnishment to be the lesser of these two amounts:
Arkansas offers a special exception for mechanics and laborers, but it's helpful in only a few cases. Under Ark. Code § 16-66-208, mechanics and laborers can claim a 60-day exemption from wage garnishment if the garnishment is less than the Arkansas personal property exemption.
Under AR Cons Art 9 § 1, the personal property exemption is $200 for single individuals with no dependents. The amount increases to $500 for married individuals and those with dependents.
AR Code § 16-110-415 states that employers must withhold and submit the nonexempt wages to the appropriate entity. Garnishment ends once the debtor repays their debt in full or the relationship between the employer and employee terminates. A modification of the judgment will also stop the garnishment.
Let’s consider an example of Arkansas wage garnishment in practice.
Example: Tiffany owes Arkansan Express $5,000 for an old, unpaid credit card. Once she stops paying her bills, Arkansan Express sues her for debt. Tiffany doesn’t attempt to resolve the matter, so the Arkansas court awards Arkansan Express a judgment against Tiffany. Arkansan Express decides to use the judgment to garnish Tiffany’s wages. She currently earns $750 weekly. According to the wage garnishment laws, American Express can require her employer to withhold $187.50 each week from Tiffany’s pay, or 25% of her income. The amount is less than the other alternative, which is $750 - (30 x $7.25), or $532.50. Since Tiffany owes $5,000, her wage garnishment will continue for 27 weeks.
The repercussions of wage garnishment are significant. Let’s see how Tiffany could have avoided it.
Wage garnishment isn’t a process that occurs overnight. Creditors and debt collectors must sue you and win their case before they can garnish your wages. A debt lawsuit isn’t arbitrary; it happens when you stop paying your bills and don’t try to get back on track.
If you fall behind on payments to a creditor, your debt doesn't disappear into thin air. Your creditor will call you and send you letters. If you don’t respond, it will initiate legal action or sell your obligation to a debt collector. In the meantime, your credit score will take a hit, and you’ll find it harder to obtain new loans or rent an apartment.
Once you receive notice of a debt lawsuit from a creditor or debt collector, it’s time to take action. File an Answer to the Complaint explaining your reasons for nonpayment. An Answer prevents a judge from automatically granting a judgment against you.
Even if your creditor has a valid lawsuit, look for an appropriate defense. For instance, you might claim that the lawsuit amount doesn’t reflect your records for the debt. However, you’ll want to avoid writing a dishonest Answer. Stick only to the facts.
Check out the video below to learn what to include in your Answer:
Next, you must determine whether you can repay the debt before your court date. Repaying the debt in its entirety before your court date stops a debt lawsuit in its tracks. If there’s nothing left to collect from you, there is no basis for a legal claim.
However, not everyone can afford to pay off debt quickly. If you don’t have enough funds, you must aim for a settlement instead. In a settlement, you pay a percentage of the amount you owe in a one-time payment. In exchange, the creditor drops the lawsuit against you and releases you from the remainder of the obligation.
The more you offer, the more likely the creditor is to accept the settlement. A fair amount is 60% of your debt’s value. However, be prepared for your creditor to ask for more, and try to have the cash available if it does.
Settling your debt lets you avoid the hassle and potential embarrassment of wage garnishment. When a creditor decides to garnish your wages, it will contact your employer, which can be awkward for you. Taking care of the matter before your case goes to court protects you from a judgment and future garnishment.
Dealing with debt can be scary, especially if you don’t have the money to repay it and are unsure of your options. Instead of avoiding your financial problems, take action and make arrangements to repay your debt.
The alternative — a debt lawsuit and wage garnishment — will cause more financial headaches and impact your ability to stay on top of your other obligations.
Is a debt collector suing you in Arkansas? Settle your debt with the help of SoloSettle.
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.
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