Debt Relief in Kentucky: Your Guide to Financial Freedom

Key Takeaways:

• Kentucky residents can access various options for debt relief, including credit counseling, debt consolidation, debt management, debt settlement, or bankruptcy.
• Kentucky residents average lower incomes and credit scores but lower amounts of debt than the rest of the country.
• The Bluegrass state has one of the highest rates of poverty in the country, which means debt can be truly devastating for those who don’t have other means of paying urgent bills.
• TurboDebt can help you through the process and guide you to the debt solution that is right for you.

TurboDebt Offers Kentucky Debt Relief

Kentucky is a beautiful place to live, but it’s also known for having high rates of low income compared to the rest of the country. If you’re a Kentucky resident and you’re struggling with a lot of debt, you’re not alone.

TurboDebt knows that getting rid of debt can be overwhelming, especially if you have a lot of other bills to pay. However, if you’re committed to following a strict regimen for making affordable payments, you’ll be on your way to escaping the cycle of debt.

In the following paragraphs, we’ll talk about debt issues Kentuckians face and offer some debt relief solutions. We hope this information will prove to be valuable and helpful for your debt relief journey.  

Debt and Finance Statistics in Kentucky

Average Income and Employment

The median income in the Bluegrass State for individuals is $27,503, and $52,238 for households. This is compared to a median household income of $69,021 across the United States. Kentucky has one of the highest poverty rates in the U.S., at 16.5%.

Credit Card Debt

Kentucky ranks as one of the states with the lowest amount of credit card debt, with residents carrying an average of $4,734. 

Consumer credit card debt in the United States reached a new all-time high of $986 billion in the fourth quarter of 2022, making it clear that Americans are falling quickly into debt by charging more on their cards. 

Auto Debt

The average auto loan debt in Kentucky was $20,554 in 2021, an increase of 7.2%, one of the highest in the country. As auto loan averages topped $20,000 for the first time in history, Kentucky residents are feeling the burden of higher costs for owning or leasing a vehicle. 

Student Loan Debt

Kentucky grads owe an average of $33,068 in federal student loans, totaling $19.5 billion in the state. 

Mortgage Debt

Residents of the Bluegrass State enjoy some of the lowest average mortgage debt at $148,519 in 2022. However, this corresponds with lower home values than much of the nation.

Although values have increased by around 6% in the past year, a home in Kentucky is currently valued at $193,871.

Credit Scores

The average credit score in Kentucky held steady in 2021 and 2022 at 702.

When determining a person's credit score, the FICO model takes into account five main characteristics, each of which is given a distinct weight, including:

• A consumer's ability to make timely payments on existing credit accounts.
• The percentage of available credit used. 
• The duration of your credit history. 
• The frequency with which you apply for and establish new lines of credit.
• The many forms of credit you use, such as credit cards, installment loans, finance company accounts, and mortgage loans (credit mix).

Identity Theft

Taking over a victim's bank accounts or opening new ones in their name, impersonating the victim to receive tax refunds or other benefits, or using a stolen identity to conduct crimes are all examples of identity theft.

It's common for victims to have their Social Security numbers, bank accounts, driver's licenses, personal health information, email passwords, and email addresses hacked. In 2022, Kentucky ranked 39th for identity theft, with 5,334 reports of fraud. 

Banking and Tax Information

Kentucky's Department of Financial Institutions (DFI) oversees the state's banking industry, the securities industry, and other financial service providers. In 2022, the State of Kentucky was home to 124 different commercial banks, which housed over $73 million in customer deposits.

Income tax rates in Kentucky are a flat 5% for all residents. Income taxes are sometimes also levied at the state and municipal levels. The corporate income tax rate in Kentucky is 5%. Kentucky’s municipal sales tax rate is 0%, while the state sales tax rate is 6%.

Payday Loan Regulations in Kentucky

Payday loans are high-interest, short-term loans offered by businesses based on personal checks held for future deposits or electronic access to personal checking accounts. They are unsecured debts, meaning they’re not based on any collateral. However, these kinds of loans are often riskier than others.

Rules and regulations on payday loan businesses vary from state to state. The total payday loans allowed per person in Kentucky is two, and it can’t exceed $500. These loans can’t last longer than 60 days. Service fees are limited to $15 per $100 of the deferred payroll check.

Payday loans have a tarnished reputation because of their high fees and how hard they can be to pay back. Businesses offering payday loans often appear in low-income neighborhoods and prey upon these populations. They also try to appeal to veterans.

Payday loans are a last-ditch solution to debt relief and should only be used in case of emergency. For such cases, a personal loan from your bank is a safer choice if you can get one. Personal loans from a bank often offer longer terms, giving you more time to pay them back and attaching lower interest rates.

If you’re struggling with paying back a personal loan, know that there are options for relief that we can assist with.

TurboDebt Can Help You Get Debt Relief in Kentucky

If you’re ready to escape debt, you’re ready to work with us. For a sustainable, healthy way to get out of debt, TurboDebt offers personalized debt relief services. We helped 1,503 residents from Kentucky in 2022, of which 499 enrolled in our debt relief program in the Bluegrass state. Our customer’s average debt was $20,915, and we enrolled a total debt of $10,436,778. We've also saved Kentucky residents an average of 49.43% on their debt obligations before fees. So, if you’re ready to start working towards becoming debt-free, TurboDebt has been proven to help Kentucky residents find relief.

Top Types of Debt to Get Relief from in Kentucky

Credit Card Debt

In the fourth quarter of 2022, the state's credit card delinquency rate sat at 7.3%, just below the national average of 7.5%. Delinquent credit card payments can add up quickly with late fees and high interest rates on your balance, making it harder to pay off your account in full. 

It's vital to tackle credit card debt in Kentucky as soon as possible. TurboDebt has helped thousands of people manage their outstanding credit card accounts. Contact us to see how we can help you. 

Divorce Debt

Debts do not disappear after a divorce. By state law, marriage debt must be distributed evenly between the parties, much like marital property. As "equitable" does not always imply "equally," this leaves much leeway for negotiating between divorcing partners. Only joint debts, such as a mortgage or credit card balances, count toward this. Some debts may fall solely under the obligation of one partner. The spouse will likely have to continue carrying the debt in such a scenario.

When determining whether or not a debt is considered marital, the date it was incurred is usually the determining factor. Most debts incurred during a marriage are treated as joint obligations. Those who are married and have taken out a mortgage to purchase a home together must remember that they are equally accountable for the payments.

When one spouse moves out after a divorce, but the other continues to pay the mortgage on the property, the person living there may be required to refinance the mortgage to remove the former spouse’s name from the loan. This means that if one ex-spouse stops paying the mortgage, the lender cannot pursue the other ex-spouse for recovery.

Business Debt

In order to grow a business, debt is often an inevitable companion. Obtaining money or taking out loans can fuel your business's growth. The trick is to learn the difference between funding that might lead to rapid expansion and financing that can bring your company to its knees.

Your company goals should guide your judgment of good and bad debt. Borrowing money to achieve objectives like obtaining property or securing supplies advances an organization. However, it's easy to incur debt to get something done without considering how you'll pay off the loan.

If you’re in a position where business debt is dragging you down, it might be a good time to get in touch with TurboDebt for a free consultation. We'll work together to see how we can alleviate your business debt.

Homeowner Debt

Real estate costs have skyrocketed across the country. Throughout the Blue Grass State, home values continue to rise in large metropolitan areas like Louisville and Lexington. In the past year, Louisville residents have seen a 4.4% increase, while Lexitonians have enjoyed a 5.5% rise. This makes buying a home challenging as interest rates continue to increase, and many homeowners are taking out more mortgage debt as a result.

Thankfully, Kentucky has one of the lowest foreclosure rates in the country at only .08% of homes.  

Medical Debt

According to the National Center for Law and Economic Justice (NCLEJ), 27% of Kentuckians report carrying medical debt. Medical debt is an unavoidable reality of living in the United States. Even if you dutifully follow the recommendations for preventive care, accidents and emergencies can still happen, racking up medical bills in the process.

Many Kentuckians have been targeted by predatory collection practices for medical debt, according to the NCLEJ study. In 2022, the nonprofit consumer protection organization and several others filed for summary judgment in a class action lawsuit against the University of Kentucky Medical in Lexington and the Kentucky Department of Revenue. The suit alleges that the two departments collected medical debts in a way that devastated low-income residents, including garnishing wages and charging harsh fees and interest on the debts.

If you want help clearing your medical debt in Kentucky, TurboDebt is here to assist you.

Debt Relief Options for Kentucky Residents

Credit Counseling

Consumers can get free guidance on debt and financial management from credit counseling agencies. Credit counselors may also offer assistance with creating a budget, discussing your credit report, and outlining a repayment plan.

Typically, a credit counseling agency's services consist of reviewing a client's current financial situation and advising them on their best course of action, for which they charge a flat fee or for no cost. Many nonprofit agencies offer services free to help consumers learn better financial strategies to stay out of debt. 

After working with a credit counseling agency, clients may be referred to a debt management firm. Debt management and credit counseling are two different services. As of October 2010, the Federal Trade Commission ruled that debt relief firms may not charge upfront fees.

Debt Consolidation Loans

To consolidate debt, a person can take out a new loan to pay off all their obligations like credit card bills or other loans in one easy-to-manage installment. Consolidating your debts might help you save money and time if you pay off many loans or credit cards. 

If you have good credit, you'll likely secure a loan at a lower interest rate. It also allows you to focus on one single payment a month instead of paying off multiple accounts. 

Learn about the various debt consolidation loan options and what you should think about before applying for one.

Debt Management

In a debt management program, private organizations help debtors in exchange for a monthly fee that is applied to the debts. Through this arrangement, a debt management firm operates as a go-between for you and your creditors, consolidating your payments into one monthly installment and disbursing the funds to their respective accounts.

Once you enroll, you’ll typically create a debt management plan to help overcome your delinquent debt. Making a payment plan with a debt management organization can assist you in getting your finances back under control.

Debt Settlement

Another alternative to assist you in getting out of debt is a debt settlement program. Debt settlement companies work with borrowers to reduce their outstanding balances by negotiating with creditors. A debt settlement organization may reduce what you owe by up to 50%.

Once you enroll in a program, you'll send a monthly payment to the debt settlement company to pay off your debt. These organizations typically charge a fee for completing the negotiations and administering an account used to pay creditors. However, you may be able to pay off your debt in as few as 24 months. 

It's important to work with a reputable organization to complete a debt settlement. You can use several entities and websites to check the reputation of a debt settlement business, including the Better Business Bureau and Trustpilot, which compile reviews and other reports about businesses into an overall rating.

Bankruptcy

A bankruptcy filing in Kentucky is similar to filing in any other state. For a new financial beginning, you must file for bankruptcy under federal law rather than Kentucky law, and this is done by terminating your debt agreements with your creditors.

Individuals typically file for Chapter 7 and Chapter 13 bankruptcy. For many, Chapter 7 bankruptcy is the best option. You can complete the filings in months, so it's a relatively fast option. Moreover, there are no costs associated with not paying off debtors. This arrangement is ideal for those of us whose assets are limited to the basics.

Chapter 13 bankruptcy is a more serious undertaking. Instead of the simpler process of Chapter 7, Chapter 13 filers have three to five years to settle their debts. 

If you decide to file for bankruptcy, it's important to seek legal advice from a law firm to determine which type of filing is best for your financial situation.

Debt Forgiveness

In some cases, you may have the opportunity to reduce or eliminate your debt through a forgiveness program. Forgiveness programs commonly include mortgage, tax, and student loan debt. 

Most debt forgiveness programs are offered by government agencies at the state and local levels. You'll need to meet strict qualifications based on factors like your job and income level. It's also important to note that you may need to pay taxes based on the amount of debt forgiven if it's counted as income. 

How To Get Debt Relief in Kentucky

If you are looking for debt assistance from a reputable business, TurboDebt can help you. We offer debt relief and consulting services to find you the best option. Our tailored program generally works best for people with over $10,000 in unsecured debt.

If you’re struggling with credit card debt, personal loan debt, or other kinds of delinquent balances, TurboDebt stands ready to assist you. We offer a free initial consultation. If you’re ready to get out of debt in as little as 24 months, contact us today.