Kentucky Debt Collection Laws — What You Need to Know

Chloe Meltzer

December 01, 2021

Summary: Are you struggling to understand Kentucky's debt collection laws? You're not alone. Here's everything you need to know.

Every state has a different set of laws as well as a statute of limitations when it comes to debt collections. In Kentucky, the average household debt is below the national average, but the default rates are higher than the national average. Default is considered at least 90 days delinquent.

What this means is that in Kentucky, residents are more likely to suffer from a debt collection lawsuit. Additionally, there are limited consumer protections in this state. It is important to understand these protections available to you, and know your rights, to fight a suit if it is brought against you. Despite this, it is essential that you do respond to debt collection lawsuits. If you do not respond and the collector wins a court judgment against you, then your bank accounts or wages could be legally garnished.

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The statute of limitations in Kentucky

To garnish your wages to pay back a debt, you need to be sued by a debt collector. The statute of limitations is a law that governs how long a creditor is legally allowed to bring you to court for debt. This legally limits how long a creditor may attempt to collect a debt through the court system. If you are a Kentucky resident, then you should know the rules that govern the Kentucky statute of limitations.

The Kentucky statute of limitations on credit card debt is a bit complicated compared to other states. In the Kentucky law on oral contracts and verbal agreements, debt collection agencies are limited to five years since the last action on any debt. The Kentucky law also states that written contracts allow creditors fifteen years before the statute of limitations will expire.

There are also other laws within the statute of limitations that govern different types of debt in Kentucky. For example, when it comes to creditors looking to recover real property, there are 15 years to sue. When it comes to suing for credit fraud, the statute of limitations is 5 years, and creditors pursuing people who owe money from judgments, contracts, or bonds, are limited to 15 years. Any other form of debt that is not specifically outlined in the Kentucky statute of limitations has a 10-year limit.

Debts that are older than the statute of limitations are called time-barred debts. Debt collectors can still contact you about a time-barred debt, but the collector cannot sue you. Once the statute of limitations passes, you will still legally owe the money to the creditor, but you cannot be sued in court. This means that you cannot be taken to court to allow the debt collector to garnish your wages or your bank accounts. You must know not to pay on this debt, or you will start your debt over again.

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Understanding debt collection in Kentucky

Kentucky does not have state laws to protect consumers or limit debt collection practices. This is somewhat concerning if you find yourself suffering from debt in the state of Kentucky, but the federal Fair Debt Collections Practices Act (FDCPA) applies in any U.S state. This is good news because these federal laws surrounding debt collection will protect you.

The FDCPA protects consumers who owe money when it comes to abusive debt collection practices. If you are being contacted by a debt collector in Kentucky, then you need to look into your rights to fight it.

There are specific parameters that govern when a debt collector can contact you. This includes the hours in which they may contact you, before 9 am or after 9 pm, as well as contacting you when it is inconvenient. Debt collectors may also not threaten you about an illegal arrest, personal harm, or increased interest charges.

If you owe a debt, you can tell them not to contact you any further. The only communication they may have with you is to notify you that a lawsuit has been placed against you, or that they will cease communication with you.

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How to Respond to a Debt Collector in Kentucky

After getting a call from a debt collector, you will need to understand why the debt collector is calling you in the first place. Debt collectors typically are calling because they think you are past due on a debt, or because they have recently purchased your debt from another collector (or creditor). In some cases, you may not remember the debt, and you may not even owe it. This is why you need to make sure that the debt is yours. Be sure to ask them to officially validate the debt.

1. Verify the Debt. When you ask to validate a debt it means that the collector has to prove the debt is yours. You can send a letter requesting specific details about your debt. They should respond with the name of the original creditor, the original account number, how much you owe, and the proof of ownership.

2. Don't Ignore the Debt Collector. Even if the debt is not yours, you need to answer the collector. If you are eventually sued then your wages and bank accounts can be garnished. This is not worth it. Try to negotiate before the debt goes to court rather than struggle with the debt after.

3. Report Unfair Debt Practices. It is essential to report debt collectors who violate your rights to the state of Kentucky. If a debt collector oversteps their legal boundaries, then submit a complaint to Kentucky's Department of Financial Institutions (DFI).

When it comes to debt in Kentucky, you must know your rights. Even if your situation is complicated there is always a way to handle the situation. Understand the tools at your disposal, and work to get yourself out of whatever hole you have dug yourself into.

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