Turbo Takeaways
- With U.S. household debt topping $17 trillion, Kentuckians are also feeling the pressure as incomes lag behind rising costs and interest rates.
- Debt relief can help reduce balances, enabling Kentucky families to move toward lasting financial freedom.
- Whether through counseling or debt settlement, Kentucky debt relief programs provide flexible options to regain control.
Your Options To Get Out of Debt in Kentucky
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 incomes remaining unchanged or barely keeping pace with inflation, many consumers struggle to meet their monthly expenses, resorting to charging more on credit cards just to make ends meet. In fact, 16% of residents in the Bluegrass State live at or below the federal poverty level.
Thankfully, Kentucky residents can access debt relief programs 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.
Credit Counseling
Credit counseling programs are effective for Kentucky residents seeking practical, unbiased financial advice.
How It Works
After enrolling in a program, you’ll connect with a certified credit advisor 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
- Personalized plan for repayment and budgeting
- Access to education tools and financial coaching
- Insight into choosing the best debt relief option
Cons
- Don’t actually involve paying off debt
- Requires personal discipline to apply advice
- Small fees may apply for continued services
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
Kentucky residents can access debt management 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
- Combines multiple payments into one manageable plan
- May lower interest rates and waive late fees
- Creates a predictable timeline to become debt-free
Cons
- Requires closing most credit accounts
- Missed payments can void negotiated terms
- Enrollment and monthly service fees apply
Cost
Most debt management programs charge an enrollment fee of around $40 and a monthly fee ranging from $25 to $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
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. It 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 scores.
Pros
- Simplifies repayment with one monthly payment
- A consolidation loan's lower rate can reduce the overall cost
- 0% balance card gives short-term relief from high interest
Cons
- Strong credit needed for best rates
- Extended consolidation loan terms can increase total interest
- Steep APRs after the balance transfer card promo period ends
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% to 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.
How It Works
Citizens of the Bluegrass State can negotiate with creditors on their own or contact a debt settlement organization to negotiate on their behalf. Working with a professional debt settlement company often reduces your total balances, sometimes by as much as 50%.
If you enroll in a debt settlement program, you’ll stop making payments to your creditors and start paying into a savings account, storing up a lump-sum payment on your debt. In return for a single large payoff, your creditors will typically agree to waive or forgive any remaining balances.
Pros
- Reduces unsecured debt by up to half before fees
- Faster payoff timeline than most repayment plans
- No upfront fees until settlements are completed
Cons
- Credit score with all three of major credit bureaus drops during the program
- Creditors may refuse settlement offers
Cost
Settlement companies charge fees ranging from 15% to 25% of your total enrolled debt once you pay your creditors.
Stats
- Residents of the Bluegrass State carried an average credit card debt of $5,266 in 2024.
Resources
Read more about the pros and cons of debt settlement 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
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
- Legal protection from creditors and collections
- May discharge qualifying unsecured debts
- Offers a clear financial reset after completion
Cons
- Remains on credit report up to 10 years
- Legal and court costs can be significant
- Some debts, like taxes or student loans, remain
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 (PDF).
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 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 bureaus’ 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 that 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 Contracts | 10 years |
| Promissory Notes | 15 years |
| Open-Ended Agreements | 5 years |
| Oral Agreements | 5 years |
| Medical Debt | 10 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:
- Teacher Recruitment Student Loan Forgiveness Pilot Program: Kentucky has recently approved this program to assist individuals working towards becoming certified teachers.
- Teacher Loan Forgiveness Program: This program pays up to $17,500 to teachers who’ve completed five years of consecutive, full-time service at a qualifying low-income elementary or secondary school or an educational service agency.
- SAVE Plan: The Saving on a Valuable Education plan is a federal repayment plan based on your income and family size.
- Public Service Loan Forgiveness: The PSLF program offers personal loan forgiveness for qualifying employees working for government or nonprofit agencies.
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 provide health care assistance to low-income residents in need.
- 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 closely with you to discuss your financial situation and develop a personalized plan to overcome even the largest debt balances.
Here are more reasons to trust TurboDebt for effective debt relief:
- BBB accredited
- No upfront fees to get started
- Customized payment plans designed to suit your budget and financial situation
- Faster debt repayment, typically between 12-24 months
- Highly valued service with over 20,000 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.