Collection agencies and debt buyers collecting from people in Arkansas must have a license to operate in the state if they want to legally do so, the Arkansas Supreme Court ruled.
The court responded to a question from a federal judge in a lawsuit between Patty Simpson of Newport, Ark. and Cavalry SPV LLC.
Simpson had argued that Cavalry violated the Fair Debt Collection Practices Act and the Arkansas Fair Debt Collection Practices Act by assigning a debt for collection without being licensed in the state.
The court rejected arguments from Cavalry that the firm was within the law because it had only "assigned" the debt to an attorney. While Arkansas law requires a collection agency to have a license to collect or solicit accounts, with no exemptions for out-of state agencies, Cavalry argued it does not meet the definition of "collection agency" because it assigned the debt to McHughes, a licensed Arkansas law firm. Officials at Cavalry could not be reached for comment.
The Arkansas Supreme Court disagreed,
The court, in its