Debt relief in Kentucky can be a helpful tool for many families. With the challenges of unemployment and the fluctuations of the real estate market, having less money to pay off debts can be a huge help.
Debt is a major problem for many Americans, and Kentuckians are no exception. The average credit user in Kentucky currently owes more than $7,000. This puts them at a 31% credit utilization ratio, which is bad for their credit score.
Credit cards can be a helpful tool for managing finances, but it’s important to know which type of card is right for your needs. For many people, a balance transfer card is a good choice.
Kentucky Credit Card Debt Stats
The following recent statistics demonstrate why Kentucky residents are struggling with high levels of personal debt.
- Average credit card debt per household: $7,190
- Average credit limit available: $11,908
- Most popular credit Card: Cash back rewards
- Debt-to-limit ratio (or “utilization rate”): 33.41%
- Number of cards: 2.78
- % of delinquent accounts (at least 90 days past due): 7.09%
- Average credit score: 663
Options For Debt Relief In Kentucky
You can do a few things to get rid of your debt, depending on your situation. You may be able to make some changes to your budget to free up some money to put toward your debt each month.
Debt consolidation loans can be a great way to pay off high-interest debt, but they also have drawbacks. Before taking out a loan, it’s important to make sure you understand the pros and cons.
One of the biggest advantages of doing debt relief in Kentucky is that it usually comes with a lower interest rate than credit cards or payday loans. Additionally, personal loans amortize over time, so you’ll eventually pay off your debt in full.
However, there are some potential disadvantages to consider as well. For example, some people find themselves in credit card trouble again after taking out a personal loan. It’s important to address underlying issues (such as insufficient earnings or overspending) before using a consolidation loan to pay off debt. Otherwise, you may end up right back where you started.
Debt can be a difficult burden to carry, but there are options available to help lighten the load. One such option is working with a non-profit credit counselor. These counselors can assist in setting up a debt management plan.
Under a debt management plan, you would make payments to the credit counseling company, using those funds to pay off your outstanding debts. The credit counseling company may be able to negotiate reduced interest rates and fees in exchange for your participation in the repayment plan.
Kentucky has laws in place regulating the rates that debt adjusters can charge, so it is still important to do your research when choosing a credit counseling company.
For many people, car and house payments can be a real strain on their finances. Refinancing may offer some relief by extending the loan terms and lowering the monthly payments. This can give you some much-needed breathing room in your budget.
Refinancing your home is another option that can help you pay off debt. With a cash-out refinance, you can use the equity in your home to get cash to pay off high-interest debts like credit cards or auto loans.
Before you apply for a refinance, it’s important to make sure your credit is in good shape. This will give you the best chance of getting approved for a loan with favorable terms.
There are a lot of options out there for students who have loans and want to refinance. However, it is important to be very careful when refinancing student loans, especially Federal student loans. Federal student loans offer special protections and privileges, such as income-driven repayment plans and deferment in some cases. Private student loans typically do not offer these same protections. So, for borrowers who are struggling with cash flow, an income-driven repayment plan may be a better option than refinancing their student loans.
Home Equity Loans
Home equity loans and lines of credit (HELOCs) can be a great way to pay off high-interest debt, such as credit card balances or a private student loan. Because these loans are backed by your home, banks may offer relatively low-interest rates.
However, borrowers need to be careful when using a HELOC or home equity loan. Defaulting on these loans could result in losing your home. So when taking out a HELOC, make sure you can handle paying off the loan without going into credit card debt again. You don’t want to take out a home equity loan to pay down debt, only to run up credit card balances once more.
Balance Transfer Card
Do you have a great credit score? You may be able to qualify for a balance transfer credit card with a 0% introductory interest rate. This can help you save money by transferring your high-interest credit card debt to a low- or no-interest card. Usually, you will only have to pay a low balance transfer fee. So take advantage of this opportunity to get out of debt faster.
Balance transfer credit cards offer cardholders a way to make headway on repaying their debt. With 0% interest for a promotional period, all payments go directly towards paying off debt.
See If You Qualify for Credit Card Relief
See how much you can save every month — plus get an estimate of time savings and total savings — with your very own personalized plan.
While balance transfer credit cards make sense mathematically, they come with certain risks. For example, you may not be able to pay off your entire balance before the promotional period ends. When this happens, interest rates on your credit card will increase, and you’ll be stuck with high-interest debt again. In some cases, people are tempted to rack up even more debt when they have such a low-interest rate. Before taking out a balance transfer credit card, it’s important to have a plan in place for paying off credit card debt for good.
Financial trouble can feel overwhelming, and it may seem like there’s no way to pay back what you owe. You might be a candidate for bankruptcy. In 2019, Kentucky had the second-highest annual per capita increase in bankruptcy filings in the U.S. and the seventh-highest number of filings per capita so far that year, according to the American Bankruptcy Institute. People who don’t own businesses usually file for Chapter 7 (liquidation) or Chapter 13 (payment plan) bankruptcy.
In Kentucky, most filers choose Chapter 7 bankruptcy. Under this type of bankruptcy, you must sell most of your assets to creditors in order to repay them. Once you’ve filed for bankruptcy and sold your assets, the bankruptcy process is complete, and you’ll have a “clean slate” when it comes to your debts. However, your credit score will be damaged.
Chapter 7 bankruptcy may force you to sell most of your assets, but Kentucky offers some protection for filers. For example, you can keep the money in your retirement accounts. Kentucky also allows you to keep up to $5,000 of home equity, $2,500 in car equity, and up to $3,000 worth of personal property (such as furniture).
An alternative to Chapter 7 bankruptcy is Chapter 13 bankruptcy. Under Chapter 13, filers get to keep all their assets; however, they must repay some or all of their debts over a period of three to five years.
Debt can be a real burden, but there are ways to get out of debt and live a healthy financial life. You can tackle your debt by yourself or reach out to a professional for help. A debt attorney or credit counselor can offer guidance and create a plan to get you on track. No matter what route you take, it’s important to be aware of your options and make a plan that works for you.