Arkansas Debt Relief
19 MIN READ
Published April 04, 2023 | Updated May 04, 2023
Written by Christie Hudon
Edited by Wes Silver
In a Nutshell
Despite Arkansas' balanced budget, the state is still producing debt. On average, Arkansas residents owe $4,670 in credit card debt, have an average household debt of $167,463, and have accrued other debts such as mortgages, student loans, and auto loans.
Thankfully, there are several excellent Arkansas debt relief programs available for residents that may be behind on their loan payments or have substantial debt. The most popular programs aim to tackle consumer debt by offering debt relief plans that will facilitate the repayment, reduction, or forgiveness of loan balances.
Because each person's financial situation is unique, it's critical to conduct research and consult with a financial advisor or attorney before deciding on a debt relief program. Read on to learn more about what option might be right for you, including our own TurboDebt program, where we saved customers an average of 51.7% of their total debt owed before fees last year.
Arkansas: Economic picture
During the pandemic, the state of Arkansas's unemployment rates reached a record high of 10%, resulting in reduced disposable income. This led to the accumulation of consumer debt and a student loan delinquency rate of 9%, which is the highest in America.
Although there’s been a recovery in unemployment rates that have fallen to 3.2% as of February 2023, the housing market is in a post-pandemic recovery phase where the demand for housing units has increased, thus increasing the average cost of housing units in the state. This has also added more consumer debt on the average Arkansas resident as consumer spending on mortgages has increased.
As a result of such financial difficulties, many Arkansas residents have found themselves in some deeper financial pitfalls requiring debt relief programs.
How does debt relief work in Arkansas?
Debt relief in Arkansas works through several key solutions, such as debt management plans, credit counseling services, debt settlement, and bankruptcy. Within some of the best options, you will be able to reduce your interest rates on loan balances, reduce monthly loan payments, extend the loan repayment period, or forgive part of your entire loan balance. This is achieved after an in depth consultation between your debt relief company and debt collectors.
Debt and finance statistics specific to Arkansas
The following debt and finance statistics are specific to the state of Arkansas:
Average consumer debt
The average consumer debt in the state of Arkansas is $70,601. This figure combines the total amount of debt from auto and student loans, mortgages, and credit cards, and it helps set a national standard for the average financial burden of individuals. Thus, with more consumer debt than most of the country, residents are more likely to seek consumer debt relief services.
Credit card debt
Arkansas’s average credit card debt average credit card debt in Arkansas was $4,670 in 2021 compared to the national average credit card debt of $5,221. This represented a drop in credit card debt from $4,758 in 2020 as consumer spending reduced. This number should not necessarily be seen as a good thing however, as we still see a majority of enrollments in Arkansas come from credit card debt.
Auto loan debt
The state of Arkansas is among the leading states with the highest auto loan debt. Individuals owe an average auto loan debt of $5,990. Auto loans are the third most common type of debt in Arkansas, trailing only student loan debt and mortgage debt.
Mortgage debt
This is the largest category of debt in Arkansas, with a total of $54.8 billion owed in mortgages as of the second quarter of 2021. Arkansas has more than 1.3 million housing units with a homeownership rate of 66.1%.
The housing market in Arkansas is affordable, with a median home value of $173,423 compared to the nation’s $327,514. Though home values have increased, it’s still convenient to own a home with a monthly median mortgage payment of $1,154 as opposed to paying a median gross rent of $803.
However, home prices vary across the state, with metropolitan areas like Bentonville and Fayetteville recording the highest average home value of $416,166 and $322,094, respectively. Areas like Jonesboro and Springdale have moderate median home values of $200,341 and $277,597.
Student loan debt
24.3% of the population in Arkansas have attained a bachelor’s degree or higher, resulting in 13% of the residents in Arkansas carrying a federal student loan debt averaging $33,534.
While student loan debt in Arkansas is the second largest category of debt in the state, it remains below America’s average of $35,287. This ranks Arkansas as the 35th leading state with student debt loan totaling $12.8 billion.
Household debt
Americans have a total household debt of $16.9 trillion. The increase in household debt in America by $394 billion let to an increase in Arkansas’ household debt-to-income ratio of 1.27.
Bankruptcy
The total number of bankruptcy cases filed by the residents of Arkansas has been declining since 2010. In 2022, the total number of bankruptcy cases filed was 5,481. Chapter 13 bankruptcy cases were the highest, with 3,336 cases filed, followed by chapter 7 bankruptcy cases at 2,228, then chapter 11 bankruptcy cases at 19 cases, and other bankruptcies at 8 cases.
Average income and employment
Arkansas has a labor force participation rate of 56.8%, and it managed to add 3,700 net payroll jobs, which brought the unemployment rate down to 3.4% from 3.8%.
The average median household income in Arkansas’ is $52,123, while the per capita income was $29,210 in 2021. This is shy of the nation’s per capita income of $37,638.
Credit scores
The residents of Arkansas have an average credit score of 694, averaging the same in both 2021 and 2022. The state ranks 44th in credit score ranking from the highest to the lowest. FICO scores between 670 and 739 are considered good scores, which can access loans at competitive rates.
To help improve your credit score, it can be vital to work with a credit repair company, or working on aspects such as minimizing your credit utilization ratio.
Identity theft
The state ranks 18th with a total number of reported identity theft cases of 4,525. The types of identity theft cases experienced in Arkansas include the following;
- Other identity theft at 47%
- Credit card fraud at 27%
- Loan or lease fraud at 16%
- Phone or utility fraud at 12%
- Bank fraud at 9%
When it comes to fraud and other cases, the state ranks 40th with a total of 15,351 fraud and other reports filed. The median fraud loss is $260.
Banking and tax info
The graduate income tax in Arkansas ranges from 2.0% to 5.5%, with a $6,000 exemption on your 401k and public pension plans. The state and local tax rate is 10.2% and the top corporate income tax rate of 5.9%.
The state has a sales tax rate of 6.5% and an average local tax rate of 2.97%, but there’s an exemption on prescription medicine for the elderly and medical equipment like wheelchairs. The property tax rate in the state is 0.64%, and there’s an annual homestead exemption fee of $375 on your principal residence.
The number of banking institutions in Arkansas is 84, with a total asset of $154,307 million in 2022 from $134,138 million in 2020. The largest deposit markets in the state are in Memphis, with 42 institutions with a total deposit of $41,793 million, and in Little Rock, which has 40 institutions and a total deposit of $29,615 million.
How TurboDebt Helped Clients with Debt in 2022
In 2022, TurboDebt helped 1,242 residents of Arkansas with their debt issues. The total number of enrolled clients in our debt relief program was 445, with an average enrolled debt of $19,594. We saved an average of 51.7% of our customers' total enrolled debt before fees, totaling an incredible $8,719,140 saved before fees.
Top Types of Debt to get Relief from in Arkansas
The following types of debts are ones we see our clients struggle with the most. If you’re having issues with any of the below, don’t hesitate to reach out for a free consultation to see if you’re eligible for enrollment in a custom TurboDebt relief program;
Credit Card Debt
With an average credit card debt of $4,160, residents of Arkansas can find eliminating this kind of debt difficult if they can’t keep up with the required monthly payments. Credit card debts have a penalty fee and a compounding interest rate when you’re past due on monthly payments, making it extremely tough to get ahead. As this goes on, it also has negative effects on your credit score.
TurboDebt is here as one of the top-rated debt relief companies serving Arkansas and can help you determine the best way to tackle credit card debt. Outside of our own program, other top ways a resident can clear their debt is through credit counseling or debt management programs. The end goal of these options is to help best manage your debts, allowing you to get back to increasing your disposable income so you can cover your basic requirements, thus avoiding accruing more debt.
Divorce Debt
Arkansas is an equitable distribution state. This means that debt accumulated during a marriage timespan is divided and distributed equally among spouses when they get a divorce, including personal loans.
Such an outcome results in the accumulation of divorce debt, which TurboDebt can help you with once you enroll in our debt relief program. Our specialists will assist you in coming up with a manageable debt settlement plan so you can achieve a debt-free life far from divorce debt.
Business Debt
The high sales tax rate in Arkansas may result in the accumulation of business debt if you fail to file your business tax reports. Groceries are the only goods that enjoy a low state tax rate of 0.125% and a local tax rate of 2.97%, but the combined sales tax rate of other goods and services is 9.47% making the cost of running a business in the state high.
TurboDebt helps Arkansans manage their business debt through with various options.
Medical Debt
18% of the residents of Arkansas owe a median medical bill of $561, and 9% of these residents lack medical insurance coverage, hence limiting access to quality medical care.
This is another top form of debt that we often enroll into our relief program, and we are very familiar with how important this type of debt relief can be. We understand that medical debt is an increasing problem, and want to ensure our customers have options when it comes to paying it off.
Homeowner Debt
Although owning a house in Arkansas is affordable, the prices of housing units have increased due to the increase in demand for houses in the state. This is a result of low unemployment rates as most residents can afford to pay for a home mortgage, therefore, increasing their homeowner debt.
Since mortgages are secured debts, you risk having a foreclosure on your home if you fall behind in repaying your homeowner debt. To avoid this financial situation, TurboDebt’s specialists can help you come up with a tailored debt relief program to tackle any home-related unsecured debts.
Retirement Debt
Arkansas is the least expensive state to retire in, with a total retirement spending of $893,051. When you couple this with the low average cost of living at 14.7% below the nation’s average ($38,266), you get a clear picture of why most retirees move into the state for retirement.
However, with a life expectancy of 73.8 years and the highest average retirement income of $30,561 in Perry county, retired residents of Arkansas may accumulate retirement debt to cater to their basic needs.
TurboDebt’s consulting services help folks in retirement manage their retirement debt by advising them on the best option for their unique financial situation.
Debt relief options in Arkansas
Arkansas residents can get out of debt through the following top debt relief programs and services;
Debt management programs
A debt management program helps debtors achieve a debt-free life by reducing the interest rates on their unsecured debt to as low as about 8%. The most common unsecured debt is credit card loans. Debt management plans also work well because they allow for an affordable monthly payment that can help you pay off debt in as little as 3 to 5 years.
There are many organizations and non-profit credit counseling agencies that will help with the process here. It usually begins when these companies engage your creditors in a debt negotiation process to agree on the terms of loan repayment based on your debt-to-income ratio.
Debt management plans will require you to close your existing credit cards to avoid accumulating and accessing new loans. You’ll also be required to make a single monthly payment to the credit counseling agency, which will distribute the payments amongst your lenders.
One of the downfalls of DMPs is that some lenders may be opposed to them.
Debt consolidation loans
Debt consolidation loans work by taking a new large loan to pay off your small loans. It works by reducing the interest rate that you’ll pay on your new loan compared to the other small loans. It also reduces the number of monthly deposits you’ll be making on your new loan.
Debtors with good FICO scores can benefit from low-interest-rate loans when seeking debt consolidation loans.
Some of the loans used in debt consolidation include balance transfer credit cards, personal loans, or home-equity loans. In some instances, you may get a 0% interest rate offer for a while when using balance transfer credit cards.
Some debt consolidation loans may result in an increase in interest fees due to extended monthly payments, so you should be aware of the overall debt consolidation loan charges. Creditors prefer debt consolidation loans since you’re likely to repay them their money.
Debt settlement
Debt settlement works by accepting a lump sum payment of the debt owed and forgiving the rest of the debt. Debt settlement companies help you negotiate a debt settlement plan that can result in debt forgiveness of up to 55%.
Debt settlement is for debtors who have a tough financial situation, are finding it difficult to meet their basic requirements, and have exhausted their credit cards. However, the credit scores of debtors with debt settlement plans will be negatively affected once you enroll in the program, thus affecting your access to personal loans in the future.
When enrolling in a debt settlement program, do due diligence to avoid being scammed by debt relief companies that ask for an upfront fee to kick start the debt settlement process. You can do this by checking the better business bureau accreditation ranking.
Credit counseling
Credit counseling works best for debtors who’re buried deep in debt and are finding it hard to make the required monthly payments or have fallen behind on their monthly payments.
Certified non-profit credit counselors will offer you financial advice to help you avoid filing for bankruptcy. They also assist you in budgeting, accessing credit reports, and choosing a debt management program to escape the never-ending cycle of debt.
You’ll be required to present your income and employment status, expenses, credit card debt, and any financial asset or burden when working with a credit counselor. This enables them to advise you on the best debt relief alternative, including debt settlement plans.
Bankruptcy
Bankruptcy is a legal process conducted in a federal court to free a debtor from debts they can’t pay. Businesses can also file bankruptcy cases under the chapter 11 bankruptcy options, where debt is reorganized, and a repayment plan is determined.
Chapter 7 bankruptcy cases involve the liquidation of assets to pay off unsecured loan debts. However, you can end up paying none of your unsecured debt if you only own exempt properties, as outlined in the US bankruptcy code.
Chapter 13 bankruptcy plans are for debtors and businesses with a consistent monthly income that can accommodate the loan payment for 3 to 5 years. Debtors will be making consistent monthly payments in exchange for keeping all their properties.
In some instances, secured loan debts may result in the repossession of your secured assets when filing for bankruptcy. You should also note that debts like child support aren’t wiped off your credit report when filing for bankruptcy.
Another downside of filing for bankruptcy is that it affects your credit report for 7 to 10 years, thus limiting your eligibility for loans.
Debt forgiveness
Debt forgiveness is when creditors decide to forgive part or all of your loans. The debts that borrowers can qualify for debt forgiveness include federal student debt loans, medical debts, credit card debts, mortgage debts, and tax debts.
The eligibility of borrowers for debt forgiveness depends on their qualification for a debt forgiveness program.
Debt and Financial Hardship Resources
The following are debt and financial hardship resources that Arkansans can enjoy when faced with financial difficulties;
Temporary assistance programs
The state of Arkansas has temporary assistance programs for needy families. The main objective of these programs is to enable needy families to stay together by improving their job, marriage, and work preparedness through upskilling, and offering resources and cash assistance.
Some of these programs include the following;
- Transitional Employment Assistance program which seeks to achieve self-sufficiency for needy families by offering them time-limited cash assistance and education on work activities through job training. The amount of cash assistance depends on the size of the needy family, the age of the children, and household income.
- Work Pays program is a follow-up program of the TEA program, which offers cash assistance to participating families to transition into self-sufficiency.
- Career Pathways program supports students of low-income families to advance their career pathways in the state’s two-year colleges and higher learning facilities. It also facilitates their training in local, high-demand career fields.
State health and human services
Arkansans can access programs related to mental health and substance abuse under the following options;
- Finding a substance abuse or mental health treatment advisor through the mental health and substance abuse support line.
- Calling the 988 suicide and crisis lifeline to avoid suicide cases among Arkansans
- Reaching out to a substance abuse prevention provider
There are also options for people with developmental disabilities to access financial assistance under the TEFRA, Traditional Medicaid, and CES waiver programs.
Other healthcare programs, such as the Medicare Savings Program, also offer deductibles for low-income families based on their incomes.
Child care
Childcare programs in the state of Arkansas include the following;
Shelters for the homeless
Arkansans can go to home shelters if they’re in a tight financial situation that has resulted in homelessness. However, due to the nature of long waiting lists in the facilities, residents should confirm the availability of the shelters before going there.
Free transportation services
Arkansans have access to Non-Emergency Transportation service, which offers free rides to and from their medical appointments or any other Medicaid service. The rides are scheduled two days before the appointment and run from 8 a.m. to 5 p.m. from Monday to Friday.
Conclusion on Finding Debt Relief in Arkansas
When considering a debt relief program, it is critical to research and compare various options, read customer reviews, and carefully review any contracts or agreements before signing. You may also want to consult with a financial advisor or debt relief specialist to help you make the best decision for your specific financial situation.
As one of the top-rated organizations out there today, TurboDebt’s extensive experience in debt relief options can help you overcome your debts for a debt-free life. You can take advantage of our free debt relief consultation initiative to determine the best option for debt relief now!