Arkansas Debt Relief
21 MIN READ
Published April 04, 2023 | Updated February 22, 2024
In a Nutshell
Despite Arkansas' balanced budget, residents are still dealing with increasing debt on a monthly basis. On average, Arkansas residents owe $4,670 in credit card debt and continue to accrue other debts such as mortgages, student loans, and auto loans.
Thankfully, there are several excellent Arkansas debt relief programs available for residents who may be behind on their loan payments or have substantial debt. The most popular programs aim to tackle a client's outstanding balances by offering debt relief plans that 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, credit counselor, or attorney before deciding on a debt relief program.
Read on to learn more about what option might be right for you, including TurboDebt's programs, which saved customers an average of 51.7% of their total debt owed before fees last year.
Arkansas Economic Picture
During the COVID-19 pandemic, the state of Arkansas' unemployment rates reached a record high of 10%, resulting in reduced disposable income for those in the “the Natural State.” This led to the accumulation of consumer debt for many residents.
Although employment rates have recovered and fallen to 2.7% as of May 2023, the housing market is in a post-pandemic recovery phase. Demand has increased, thus increasing the average cost of housing throughout the state. This has also added more consumer debt for the average Arkansas resident, as consumer spending on mortgages with sky-rocketing interest rates has increased exponentially in the past few years.
As a result of such economic and financial difficulties, many Arkansas residents have found themselves getting into some deeper financial straits, requiring debt relief programs to help them get a fresh start.
How Does Debt Relief Work in Arkansas?
Debt relief in Arkansas involves several options, such as debt management programs, credit counseling services, debt settlement plans, and bankruptcy. Many of these options give you the chance to reduce your interest rates on loan balances, reduce monthly loan payments, extend the loan repayment period, or eliminate part of your loan balance. This is achieved through 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. Average consumer debt also helps set a national standard for the total financial burden individuals carry. Thus, with more consumer debt than most of the country, residents of a particular state are more likely to seek consumer debt relief services.
Credit Card Debt
Arkansas’s average credit card debt was $4,670 in 2021 compared to the national average of $5,221. This represented a drop in credit card debt from $4,758 in 2020 as consumer spending on revolving credit card accounts slightly declined. However, at TurboDebt, we still see a majority of debt relief enrollments in Arkansas come from credit card debt.
Auto Loan Debt
Arkansas is among the states with the highest auto loan debt. Individuals owe an average auto loan debt of $5,990, the fourth-highest average balance in the country. Auto loans are the third most common type of debt in Arkansas, trailing only student loan debt and mortgage debt.
Mortgage debt is the largest category of debt in Arkansas, with a total of $54.8 billion owed in mortgages, spread among its 3 million residents as of the second quarter of 2021.
One positive factor is that the housing market in Arkansas is considered very affordable, with an average home value of $200,795 as of 2023, compared to the nation’s $348,539 average home value as of the third quarter of 2023.
Though home values have increased, it’s still comparatively affordable 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 recording the highest average home value of $440,703.
Student Loan Debt
Americans have a total household debt of $16.9 trillion. An increase in household debt in America as interest rates increased throughout 2022 led to an increase in Arkansas’ household debt-to-income ratio to 1.347, up from 1.27 just a year earlier.
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.
Average Income and Employment
Arkansas has a labor force participation rate of 56.8%, adding 3,700 net payroll jobs, which brought the unemployment rate down to 2.8% as of April 2023.
The average median household income in Arkansas’ is $52,123, while the per capita income was $29,210 in 2021. This is considerably lower than the nation’s per capita income of $37,638.
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, making it easier to access loans at competitive rates.
The state ranks 18th in the nation, 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%
Banking and Tax Info
Arkansas' graduated state income tax ranges from 2.0% to 4.9%, depending on income, with a state income tax exemption on the first $6,000 in income from private and public employer-sponsored retirement plans, including your 401(k). The state’s top corporate income tax rate is 5.30%.
The state has a sales tax rate of 6.5% and an average local tax rate of 2.96%. The property tax rate in the state is 0.64% of the assessed value, and there’s an annual homestead exemption fee of $375 on your principal residence.
The number of banking institutions with consumer deposits and/or loans being issued in Arkansas is currently 84, with a total asset of $163.3 billion in the 3rd quarter of 2023, up from $134.2 billion in 2020. The largest deposit markets in the state are in Memphis, with 42 institutions holding total deposits of $41.8 billion, and in Little Rock, which has 40 institutions and a total deposit of $29.6 billion.
How TurboDebt Helped Clients With Debt in 2023
In 2023, TurboDebt helped 2,456 residents of Arkansas navigate their debt-related issues. The total number of enrolled clients in our debt relief program was 726, with an average enrolled debt of $22,278. We saved an average of 53.29% of our customers' total enrolled debt before fees, totaling an incredible $16,173,888.
Top Types of Debt To Get Relief From in Arkansas
The following types of debts are the ones we see our clients struggle with the most. If you’re having issues with any of the following, don’t hesitate to reach out to us for a free consultation to see if you’re eligible for enrollment in TurboDebt's custom relief programs:
Credit Card Debt
With an average credit card debt of over $4,000, residents of Arkansas can find eliminating this kind of debt difficult if they can’t keep up with the required monthly payments. Credit cards often have substantial penalties for late payments and a compounding interest rate that averages well above 20% per year when cardholders carry balances from month to month, making it extremely tough to get ahead if your monthly budget does not allow for you to pay the entire balance off in one payment. As this goes on and possibly gets worse, it also has negative effects on credit scores.
TurboDebt is here to help as a reputable debt relief company serving Arkansas and can help you determine the best way to tackle your 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 manage and eliminate your debts, allowing you to keep more of your income each month and avoid accruing more debt.
Arkansas is an equitable distribution state. This means that debt accumulated during a marriage is divided and distributed equally among the two spouses when they get a divorce. This includes mortgages, personal loans, and other joint debt.
Such an outcome results in the accumulation of divorce debt, which TurboDebt can help with once you enroll in our debt relief program. Our specialists will assist you in coming up with a manageable debt settlement plan after a costly divorce.
While it's normal to carry some business debt as a company owner, if you're taking out additional loans to cover expenses without generating enough profit, you may need to seek debt relief help.
Making a long-term strategy to make your business profitable and get out of debt is something we can help you with at TurboDebt.
Medical debt is another type of debt we enroll in our programs at TurboDebt. We understand how difficult it can be to overcome unexpected medical bills or even high costs from planned healthcare procedures.
In Arkansas,18% of residents owe a median medical bill of $561, and approximately 9% of these residents lack medical insurance coverage altogether, hence limiting access to quality medical care at an affordable cost.
Although owning a house in Arkansas can be affordable, prices for housing units have increased because of the increasing demand within the state. This could be a result of low unemployment rates as many residents can afford to pay for a home mortgage, therefore increasing home ownership-related debt in general.
Since mortgages are secured debts, you risk foreclosure on your home if you fall behind in repaying your mortgage loan. To avoid this financial situation, TurboDebt’s specialists can help you come up with a tailored debt relief program to tackle mortgage debts.
Arkansas is considered the least expensive state to retire in, with a total of $893,051 required in retirement savings to live comfortably throughout the length of the average retirement. When you couple this with the low average cost of living that hovers well below the nation’s average, 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 still 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 pursue different debt relief options through the following programs and services:
Debt Management Programs
A debt management program helps debtors negotiate for reduced interest rates on their unsecured debt, sometimes as low as 10%-12% APR. The most common unsecured debt is from credit cards, which carry a typical Annual Percentage Rate (APR) of 20% or more. Debt management plans also help you set up an affordable monthly payment that can help you pay off debt in under five years.
As part of their program, debt management plans may require you to close your existing credit cards to avoid accumulating and accessing new loans while you’re paying off your old ones. You’ll also be required to make a single monthly payment to the credit counseling agency, which will distribute the payments amongst your lenders on your behalf.
Debt Consolidation Loans
Debt consolidation loans involve taking a new loan that is large enough to pay off your smaller loans and debts. This option is effective because you'll typically pay a lower interest rate on your new loan compared to the other small loans or multiple credit card accounts you may have. It also reduces the number of monthly payments you’ll be making, as you’ll only make one large payment on your new loan each month instead of several smaller payments to numerous accounts.
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 12-24 month, low-rate balance transfer offers on certain credit cards, personal loans, or home-equity loans. In some instances, you may get a 0% interest rate offer for a select period of time when using balance transfer offers.
Some debt consolidation loans may result in an increase in total interest paid due to extended monthly payments that come with these types of loans, so you should always read and be aware of the overall interest and charges that are required to be disclosed in the debt consolidation loan’s documents.
In a debt settlement, your creditor agrees to accept a reduced amount of the total debt owed, allowing you to eliminate a large outstanding balance. Debt settlement companies help you negotiate a settlement plan that can result in debt forgiveness of up to 55% of your current debt before the settlement company’s fees are applied.
Debt settlement can be an effective choice for debtors who are facing a tough but temporary financial situation or are finding it difficult to meet their minimum payments with the income they earn Or, it could be because they have maxed out their credit cards, in the revolving cycle of increasing amounts of interest owed each month.
In most cases, the credit scores of debtors with debt settlement plans are negatively affected once you enroll in a program. However, this is generally for a short period of time, and you will see your credit profile improve slowly but consistently as you make on-time payments and eventually eliminate your debts.
When enrolling in a debt settlement program, it's important to do your due diligence to avoid being scammed by debt relief companies that ask for upfront fees. You can do this by checking the Better Business Bureau accreditation ranking and looking at reviews from trusted sources. It’s illegal, in Arkansas and every other state, for a debt settlement company to charge up-front fees for their services before they even start negotiating with your creditors.
Credit counseling works best for debtors who need advice to handle a tough financial situation like excessive debt.
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 management program to escape the never-ending cycle of debt.
You’ll be required to present information such as your income and employment status, expenses, credit card debt, and any financial asset or burden when working with a credit counselor. This helps the credit counseling agency advise you on the best debt relief alternative, including debt settlement plans.
Bankruptcy is a legal process conducted in a federal court to free a debtor from debts they can’t pay or restructure an easier payment plan for the debts they currently owe. 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. In some cases, the court may waive your unsecured debt if you only own exempt properties or assets, as outlined in the US bankruptcy code.
Chapter 13 bankruptcy plans are for debtors with a consistent monthly income that can accommodate a debt repayment over the course of 3 to 5 years. Using this option, debtors make consistent monthly payments in exchange for keeping all their property and assets.
In some instances, secured loan debts may result in the repossession and sale of your secured assets when filing for bankruptcy. You should also note that debts like child support and back taxes aren’t wiped off your credit report when filing for bankruptcy.
Another downside of filing for bankruptcy is that it severely affects your credit score, and these negative effects will very likely remain on your credit report for 7 to 10 years, thus limiting your eligibility for securing new loans and lines of credit during that time.
If you're considering bankruptcy, it's a good idea to seek advice from a law firm before pursuing this as a debt relief solution.
Debt forgiveness is a rare form of debt relief when creditors forgive part or all of your loans. The most common debt forgiveness programs include federal student debt loans, medical debts, credit card debts, and mortgage debts.
Eligibility for these programs depends on factors like income and job status. Most programs hold strict requirements to decide if debtors qualify for forgiveness. Federal organizations at the state and national levels are the most likely organizations to offer debt forgiveness to families and individuals experiencing financial hardship.
Debt and Financial Hardship Resources
The following debt and financial hardship resources aid Arkansas residents with financial difficulties:
Temporary Assistance Programs
The state of Arkansas offers temporary assistance programs for families in need. The main objective of these programs is to enable 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 (TEA): This program helps families achieve self-sufficiency 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 family in need, the ages of their children, and their household income.
- Work Pays: This program is a follow-up of the TEA program, which offers cash assistance to participating families to help them transition into self-sufficiency.
- The 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, offer deductibles for low-income families based on their incomes.
Child care programs in the state of Arkansas include the following:
- ARKids First: This is a subsidized medical insurance program for kids across the state. For you to qualify for the program, you must meet its income eligibility requirements, which are favorable to low-income families.
- TEFRA program helps low-income families with kids who are receiving disability care from home access medical deductions. To qualify, countable resources for children can't exceed $2,000.
Brad Reichert, founder and managing director of Reichert Asset Management LLC, offers more insight into the child care needs of Arkansas residents:
“Child care has become a topic of particular importance, and a key support issue for working families in Arkansas in recent years, as high child care costs often challenge families and single parents with young children, financially, Reichert explains.
“In addition, the child care industry in Arkansas is struggling, as the workforce has decreased by about 5% (or 600 workers) since the start of the pandemic. As a result, the Arkansas state government, as well as hundreds of private companies throughout the state, have recently focused renewed efforts on making child care more available, and less expensive, for working parents,” Reichert adds.
Over time, Reichert hopes this will bring needed help to many Arkansas residents struggling to pay bills and keep debts manageable.
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. Schedule rides two days before the appointment. Rides run from 8 a.m. to 5 p.m., Monday to Friday.
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.
You can view thousands of 5-star TurboDebt reviews from Google and Trustpilot to see how actual clients benefitted from our debt relief program.
TurboDebt’s extensive experience in debt relief can help you start on the path toward a debt-free life. Take advantage of our free debt relief consultation to determine the best option for debt relief now!