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How to Get Debt Relief in Kentucky

Dena Standley | October 19, 2022

When you find the debt relief you deserve

Summary: If you're struggling with debt in Kentucky, SoloSuit can help you find the relief you need.

As a resident of Kentucky, you may be in a situation where you are not making any progress on repaying your debt. Instead, the debt continues to pile up, causing your credit score to decrease while your anxiety climbs.

Many Kentucky residents who are experiencing financial challenges seek debt relief options to ease their burden. Debt relief programs are available in Kentucky to help consumers struggling to pay off their credit card and personal loan debt. These debt relief programs offer solutions by enabling you to:

  • Lower your monthly payments
  • Reduce your overall debt
  • Save money
  • Get out of debt faster

A Debt relief option is not the best solution for everyone. You have to understand how each option works and the consequences that follow. Common debt relief options include debt management and consolidation, debt settlement or resolution, and bankruptcy. Before we discuss these options, let us look at the right time to seek debt relief programs in Kentucky and the programs available.

The ideal time to seek debt relief in Kentucky

According to the New York Federal Reserve Data, Kentucky has a higher credit card default rate than the national average. This statistic means that residents of Kentucky are more likely to experience a run-in with debt collectors than the average American. Consider looking for debt relief options if you are in either of these situations:

  • Your entire unpaid, unsecured debt is equal to or more than your gross income
  • You have no means to repay your unsecured debt within five years, even if you completely cut back on spending

On the flip side, if you can repay your unsecured debts within five years, you can develop a do-it-yourself plan to clear the debt without using a debt relief company.

Debt relief programs in Kentucky

A Kentucky resident struggling to make ends meet due to massive debt balances has several debt relief programs that can assist them in recovering financially. For example, the Kentucky Homeownership Protection Center was established by the Kentucky General Assembly to offer free resources to homeowners about to foreclose.

In the recent past, Kentucky also established a debt adjusters directory. These are registered professionals who can assist you deal with outstanding and delinquent debt. Depending on the debt adjuster you choose, you can get paid or free services. National Foundation for Credit Counseling can help you find non-profit debt counselors.

If you choose to work with a for-profit debt adjuster, such as a debt settlement company, perform a thorough investigation to avoid being scammed. Be cautious about companies that promote questionable government programs, offer you special deals, and make unrealistic promises.

Kentucky debt relief options

Being in massive debt can easily cause you to accept any debt relief solution available. Take time before working with any debt relief company or individual. Carefully assess the following options and pick the one that works best for you.

Debt management plan

Debt management, also referred to as a debt consolidation plan, entails paying off unsecured debts by consolidating several debts into a single, more workable payment plan. In this option, you work with a credit counseling agency that advises you on the best deal they can get for the type of debt you have.

Most credit counseling agencies in Kentucky have a long-standing agreement with creditors and can negotiate a fairer plan to help you pay your debt more efficiently. These benefits include:

  • Lowering the interest rate
  • Waiving late fees and penalties
  • Making monthly payments more affordable

In most cases, you will have to close all your credit cards, and you can only apply for a new one once you finish paying the debt. A debt management plan rarely affects your credit score but closing all the credit cards for a prolonged period hurts your score.

Debt settlement plan

A debt settlement or resolution plan is a debt relief option that promises to help you save some money by paying the creditors an amount lower than you owe. If you work with a debt settlement company, the first requirement is to stop making payments and deposit the money in an account they control. The idea is to get the creditor to fear losing all their money and accept a significantly lower amount.

Debt settlement can be a great option if you can't afford to pay off the debt in full. Most creditors are willing to settle for 20%-70% of the original amount, while debt collectors will settle for as little as 1%-60%. In other words, you have a great chance of reaching a payment plan that is less than what you owed in the first place.

That being said, you should know that failing to make regular payments to creditors results in negative repercussions from which debt settlement companies cannot save you. These adverse actions include:

  • Receiving multiple collection calls
  • Accruing penalty fees
  • Lowering your credit score further
  • Being sued for failing to pay a debt

It is also important to note that money saved using the debt settlement option attracts federal tax. Watch this video for more insights on debt settlement:

Filing for bankruptcy in Kentucky

Consumers who will not be able to pay their debt even if they enter into a debt management or settlement plan can file for bankruptcy. The most typical form of bankruptcy is chapter 7 liquidation, which erases most unsecured personal loans, credit cards, and medical debt. As relieving as this option sounds, there are essential things to note:

  • Taxes owed, child support responsibilities, and student loans are not erased.
  • The record stays in your credit report for ten years and adversely affects your credit score.
  • If you add a co-signer, they will be responsible for your debt.
  • You cannot file for another bankruptcy for eight years if you acquire new debt.
  • You may have to give up property and assets you would have loved to keep. Kentucky residents can keep up to $5000 in equity and also receive an exemption for clothing and furniture worth up to $3,000.

If you want to keep your assets, you can file for a Chapter 13 bankruptcy that entails accepting a 3–5year court-approved debt repayment plan. If you stick to the plan, the courts will discharge the remaining debt, and you can keep your assets. But if you fail to make the payments, you eventually lose your assets.

In some situations, consumers look for a debt relief option after receiving a lawsuit letter from debt collectors. The first response is to send an Answer, and SoloSuit can help you draft a powerful document. Our software allows you to customize your Answer according to your needs. Here is a video showing you how to respond to a lawsuit.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

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