Detailed Answer
When a loved one passes away in Arkansas, the executor (personal representative) must publish notice to creditors and allow claims under Ark. Code Ann. § 28-41-301 (https://www.arkleg.state.ar.us/Arkansas%20Code/Title%2028/SubTitle%204/Chapter%2041/Subchapter%203/28-41-301). Creditors then have 60 days after publication to present debts. Once a predatory loan claim surfaces—such as a high-interest loan exceeding Arkansas’s 17% usury cap under Ark. Code Ann. § 4-57-102 (https://www.arkleg.state.ar.us/Arkansas%20Code/Title%204/SubTitle%20-%20Banking/Chapter%2057/Subchapter%20-%20Usury/4-57-102)—the executor can formally object.
Under Ark. Code Ann. § 28-41-310 (https://www.arkleg.state.ar.us/Arkansas%20Code/Title%2028/SubTitle%204/Chapter%2041/Subchapter%203/28-41-310), file an exception to claim in the probate court. In that written exception, state that the loan is void or unenforceable due to predatory terms—such as usurious rates, hidden fees, or deceptive disclosures violating the Arkansas Deceptive Trade Practices Act (ADTPA), Ark. Code Ann. § 4-88-101 et seq. (https://www.arkleg.state.ar.us/Arkansas%20Code/Title%204/SubTitle%20-%20Consumer%20Protection/Chapter%2088). You may also assert unconscionability under the Unconscionable Sales Act, Ark. Code Ann. § 16-108-503 (https://www.arkleg.state.ar.us/Arkansas%20Code/Title%2016/SubTitle%20-%20Civil%20Procedure%20and%20Courts/Chapter%20108/Subchapter%20-%20Unconscionable%20Sales%20Act/16-108-503) or common-law contract defenses.
Once the objection is on record, the creditor may request a hearing. The court will evaluate evidence such as the loan agreement, interest calculation, disclosures and the decedent’s vulnerability. If the court finds predatory practices, it can disallow the claim in full or in part. In parallel, the executor may bring a separate action under ADTPA’s civil remedies provision, Ark. Code Ann. § 4-88-113 (https://www.arkleg.state.ar.us/Arkansas%20Code/Title%204/SubTitle%20-%20Consumer%20Protection/Chapter%2088/Subchapter%20-%20Civil%20Remedies/4-88-113), seeking restitution or injunctive relief against the lender.
Key Steps for an Executor:
- Publish notice to creditors and monitor the 60-day claim period under Ark. Code Ann. § 28-41-301.
- Review each loan for usury, hidden fees and deceptive terms violating Ark. Code Ann. §§ 4-57-102 & 4-88-101 et seq.
- File an exception to the creditor’s claim under Ark. Code Ann. § 28-41-310, detailing predatory lending grounds.
- Gather evidence: the promissory note, payment records, marketing materials and any medical or capacity evidence showing decedent’s vulnerability.
- Attend the hearing. Present statutory and common-law defenses showing the debt’s invalidity.
- Consider parallel ADTPA litigation under Ark. Code Ann. § 4-88-113 for broader relief.
Helpful Hints
- Track all probate deadlines. Missing the 60-day window may waive your right to object.
- Obtain the original loan documents and a ledger of all charges.
- Look for APR disclosures. Arkansas law mandates clear annual percentage rate warnings.
- Document any high-pressure sales tactics or hidden fees.
- Collect medical records or caregiver statements showing the decedent’s diminished capacity.
- Work with a probate or elder-law attorney to draft precise exceptions and develop your case strategy.
- Use a forensic accountant to analyze whether interest or fees exceed lawful limits.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney in Arkansas to address your unique situation.