In a Nutshell

The rambling fields of the Bluegrass State invoke serenity and beauty. But for some, a thriving life in their “Old Kentucky Home” is overshadowed by heavy financial burdens.

With U.S. household debt topping $17 trillion in quarter three of 2024, Kentucky residents are left trying to squeeze more out of their incomes in the midst of record inflation and the highest interest rates we’ve seen in decades.

And with incomes remaining unchanged or just barely keeping up with inflation, many consumers struggle to meet monthly expenses, charging more on credit cards just to make ends meet. In fact, 16% of Bluegrass State residents live at or below the federal poverty level.

Thankfully, Kentucky residents can access debt relief options to eliminate high balances and break the debt cycle. Read on to learn more about the top solutions available to residents of the Bluegrass State.

Your Options To Get Out of Debt in Kentucky

Credit Counseling

Credit counseling programs are effective for Kentucky residents seeking practical, unbiased financial advice.

How It Works in Kentucky
After enrolling in a program, you’ll connect with a certified credit counselor who can answer financial questions and review your credit history. Credit counseling programs also offer in-depth financial education courses related to skills like budgeting and investing.
Pros
Getting personalized advice from a credit counselor can give you insight into choosing the best debt relief option. Credit counseling programs also cost very little, usually just a nominal enrollment fee.
Cons
While credit counseling programs offer lots of personalized advice, they don’t actually involve paying off debt. If you lack the motivation to act on the advice provided by a credit counselor, you’ll be right back where you started financially.
Cost
Enrolling in a credit counseling program costs very little, with many programs offering free or low-cost services to those facing financial hardship.
Stats
While credit counseling offers a solution for unbiased financial advice, more consumers have turned to debt settlement for relief in the past decade.
Resources
Find out how credit counseling aids consumers through financial education and advice.

Debt Management

Debt management programs (DMPs) take over the responsibility of paying your monthly debt once you enroll. These services offer an effective way to organize your monthly payment schedule.

How It Works in Kentucky
Kentucky residents can access DMPs through a credit counseling agency or a private company. Once you enroll, you’ll send monthly payments to the organization, which will distribute your funds to creditors. Enrolling in a DMP also reduces your chances of accidentally missing a payment or sending a payment for the wrong amount.
Pros
Financial experts or credit counselors facilitating your DMP will often negotiate with creditors to reduce high interest rates and waive certain types of account fees. This can save you hundreds of dollars and help you pay down your debt more easily.
Cons
You’ll need to pay a monthly fee for each account you enroll in a DMP. Plus, you’ll have to close out most, if not all, of your credit card accounts to limit additional spending while on a debt management plan.
Cost
Most debt management programs charge an enrollment fee of around $40 and a monthly fee ranging from $25-$35 for each account.
Stats
Some DMPs help Bluegrass State citizens manage certain student loan payments. With an average student loan debt of $33,581, many Kentucky residents can benefit from this option.
Resources
Discover how debt management programs help consumers manage certain debts.

Debt Consolidation

Consolidating debt is a DIY approach Kentucky residents can take to more effectively clear small to moderate unsecured debts.

How It Works in Kentucky
Bluegrass State citizens can opt for one of two debt consolidation choices. The first is to open a zero or low-interest balance transfer credit card and move their existing high-interest balances to that card.
 The second option is to take out a debt consolidation loan big enough to cover all existing unsecured debts and bills. This option shifts your monthly payments to a single account, ideally at a lower interest rate than the combined average rate you’re paying on your current debts. This option works best for Kentucky residents with fair to good credit.
Pros
Balance transfer credit cards give you breathing room to pay off debts without accruing more interest, making it easier to break the debt cycle for smaller balances.
Consolidation loans help you reorganize your debt payments and can significantly reduce the interest you’ll pay if you lock in a low enough rate.
Cons
If you fail to pay off your entire transferred balance before the initial zero-interest promo period ends, you could be stuck paying exorbitant fees. This happens because your interest rates on any remaining balance will revert to the current standard APRs for purchases and cash advances for your new balance transfer card, which could be as high as 29%.
 Consolidation loans could also end up costing you more in interest if you take a long time to repay the balance. The longer your repayment term, the longer interest can be charged on your outstanding balance.
Cost
How much you’ll pay each month for a consolidation loan depends on your initial balance, your interest rate, and the length of the loan. It’s a good idea to sit down and calculate all these factors before you sign for a new loan.
Balance transfer cards may charge an average transfer fee of 3%-5% to move your balances over to your new account. It’s also important to read the terms carefully to determine the penalties for not paying off your balance in full during the initial zero or low-interest period.
Stats
Kentucky’s average total consumer debt was $73,132 in 2023.
Resources
Find out if debt consolidation loans are the most effective solution for your finances.

Debt Settlement

Kentucky residents with large unsecured balances from credit cards, medical bills, and personal loans can find quick relief through a debt settlement. Working with a professional debt settlement company often reduces your total balance(s), sometimes by as much as 50%.

How It Works in Kentucky
Citizens of the Bluegrass State can negotiate with creditors on their own or contact a debt settlement organization to negotiate on their behalf. If you enroll in a debt settlement program, you’ll stop making payments to your creditor(s) and start paying into a savings account, storing up a lump-sum payment on your debt. In return for a single large payoff, your creditor(s) will typically agree to waive or forgive any remaining balance(s).
Pros
Leveraging the expertise of a debt settlement company can result in you paying off debt faster for less. You’ll also set up a customized plan to pay off your debt in a way you can afford.
Cons
Because you’ll stop making payments on your debts, your credit scores with all three of the major credit bureaus drop significantly. However, once you pay off your settled debt and continue making regular, on-time payments on all your other bills and debts, you’ll typically build these scores back up pretty quickly.
Cost
Settlement companies charge fees ranging from 15-25% of your total enrolled debt once you pay your creditors.
Stats
Bluegrass State residents carried an average credit card debt of $5,266 in 2024.
Resources
Read more about the debt settlement process to determine if it’s the right method to relieve your outstanding balances.

Bankruptcy

Declaring bankruptcy is a last resort for Kentucky residents to start fresh and absolve most secured and unsecured debts.

How It Works in Kentucky
Filing for bankruptcy in Kentucky depends on where you live. Each region of the Bluegrass State is governed by a separate bankruptcy court with offices in large population centers. Individual consumers typically file either Chapter 7 or Chapter 13 bankruptcy.
Pros
Bankruptcy uses the court system to organize and repay your debts, giving you a clean financial slate. You may be able to have a portion of your debts absolved or forgiven if you follow the court's directions and stick to the terms of your bankruptcy agreement.
Cons
In order to restart financially, you’ll likely have to sell off assets or follow a court-ordered payment plan until your debts are resolved.
Cost
Attorney fees can add up to thousands of dollars. You’ll also pay filing fees through the court.
Stats
In 2024, a total of 11,004 Kentucky residents filed for some type of bankruptcy.
Resources
Learn more about Chapter 7 vs. Chapter 13 bankruptcy, the most common types of bankruptcy petitions filed by individual consumers.

What You Need To Know About Debt in the State of Kentucky

Brad Reichert, a debt expert and the founder and managing director of Reichert Asset Management LLC, offers the following advice for Kentucky consumers:

“Before you talk to a certified credit counselor, debt settlement, or debt management firm, it is always a good idea to obtain and review the most recent copy of your credit reports from all three of the major credit reporting bureaus (Experian, TransUnion, and Equifax) to make sure all of the information showing on them is correct,” Reichert says.

“If there are accounts on any of them that shouldn’t be there or are showing incorrectly, it is your right under the Fair Credit Reporting Act to have this information disputed and corrected. In addition, you have a right to a free copy of your credit reports from all three credit bureaus at least once a year. To obtain a free copy and for help in correcting inaccurate information, you can go to each of the three bureau’s websites or through the Annual Credit Report’s website,” Reichert adds.

“Although you may have to pay a small fee for your credit scores, the reports themselves should be provided to you free of charge.  Any firm or organization which charges you to obtain this information for a fee should be reported to the Federal Trade Commission,” he explains.

Statute of Limitations on Debt Collections in Kentucky

Kentucky’s Statute of Limitations on Debt Collection governs the length of time a creditor can pursue legal action against a consumer for not paying their debts. Although debts never disappear, creditors can’t sue an individual once the time limit has expired. Compared to most other states, Kentucky has some of the longest statutes of limitations in the country.

While some types of debt have a Statute of Limitations lasting only 5 years, others last a decade or more in the Bluegrass State. Here’s a look at the statutes by type of debt in Kentucky:

Type of Debt Agreement Length of Time Collectible
Written Contracts10 years
Promissory Notes15 years
Open-Ended Agreements5 years
Oral Agreements5 years
Medical Debt10 years

Student Loan Forgiveness in Kentucky

Kentucky offers several loan forgiveness programs through both federal and state programs. Students may qualify for the following student loan forgiveness programs in Kentucky:

Resources for Financial Assistance in Kentucky

Although Kentucky stimulus checks are no longer issued, the Derby State offers programs to support residents needing financial assistance.

Here are some of the key financial assistance programs residents can access to improve their quality of life:

  • SNAP: Kentucky administers the Supplemental Nutrition Assistance Program (formerly called “Food Stamps”) to help low-income residents purchase nutritious food or items to grow their own produce.
  • Medicaid: Medicaid is a federal program administered by the State of Kentucky to low-income residents in need of health care assistance.
  • Kentucky Department of Veterans Affairs: Veterans of the U.S. Military can access benefits, including financial assistance, through the KDVA.
  • Kentucky Transitional Assistance Program: KTAP helps families with children pay for basic expenses.

Get Professional Help Paying Off Your Debt

Getting stuck in a cycle of debt can make every day a struggle. Sometimes, the best way to escape debt is to seek help from a professional organization like TurboDebt. Our expert team members work with you to discuss your financial situation and make a plan to overcome even the largest debt balances.

TurboDebt Debt Relief Program Statistics in Kentucky

Here are more reasons to trust TurboDebt for effective debt relief:

  • BBB accredited
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  • Customized payment plans designed to suit your budget and financial situation
  • Faster debt repayment, typically between 12-24 months
  • Highly valued service with over 15,000 5-star TurboDebt reviews
  • Possible savings of 50% or more using our debt settlement plans

Don’t let debt take over your future. Start down the path to financial freedom today. Contact the TurboDebt team to find out if you qualify for our trusted debt relief services.