What penalties or interest can creditors charge when settling debt?

In Arkansas, creditors can attempt to collect on debts by charging penalties and interest when settling debts. However, the amount of interest and penalties they can charge is limited under Arkansas state law. In Arkansas, creditors are prohibited from charging an interest rate higher than 10%. In addition, creditors must immediately cease charging interest, penalties, or fees once a settlement agreement is reached. This means that creditors cannot attempt to collect any additional fees after a settlement is reached. Before agreeing to a debt settlement, it is important to understand the terms of the agreement. The amount of money that is owed, the repayment schedule, and any additional fees or penalties should all be included and clearly outlined. Creditors are also limited in the amount of additional fees they are permitted to charge in order to settle a debt. In Arkansas, creditors are limited to a maximum of 10% of the original debt amount. This means creditors are not able to charge more than 10% of the original balance, even if they have been unable to collect payments for several months. Creditors are required by law to provide written documentation of any fees or penalties that they attempt to charge in order to settle a debt. If creditors are unable to clearly explain the fees or penalties associated with a settlement agreement, it is best to refuse the agreement and search for a better deal.

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