Kentucky Debt Consolidation

LOUISVILLE BANKRUPTCY ATTORNEY
kentucky debt consolidation

Those struggling with managing their debt are often desperate for a solution. That’s where debt settlement and debt consolidation companies come in. In many cases, a debt settlement company will target vulnerable individuals seeking debt settlement services. Sometimes, a debt consolidation loan or debt settlement plan is ultimately a ploy to trick consumers into paying more than they owe. Unfortunately, the relative newness and popularity of this industry mean it is largely unregulated. At O’Bryan Law Offices, we offer Kentucky residents a chance to achieve debt relief without being left worse off than they were before.

We offer a multitude of options and plans that are personally tailored to your individual needs. Not every person likes bankruptcy as an option. Therefore, we offer other Kentucky debt consolidation plans. If you find yourself in a financial rut and need relief, we’re here to help. No matter your financial situation, we can help you find the best debt relief solution for you. To schedule your free and confidential consultation, please call 502-400-4020 today.

Kentucky Debt Statistics

Before we dive into the meat and potatoes of a debt settlement program and debt consolidation program, we’ll provide you with some notable Kentucky debt statistics. Firstly, Kentucky is one of the poorest states in the nation. In fact, the poverty rate in Kentucky for 2020 was 16.3%. That’s nearly 5% higher than the national average.

However, it’s also important to note that poverty levels have actually fallen in Kentucky in recent years. Since 2011, poverty rates have fallen from 19.4% to 16.3%. While it may not be a radical change, it is still a noticeable level of improvement. Below, we list other notable indicators of Kentucky debt for consumers.

  • Student Loan Debt: In 2020, Kentucky residents owed an average of $32,500 for student loan debts.
  • Household Debt: In 2021, the average Kentucky resident is $34,910 in debt. Additionally, their median household income sits $13,475 below the national average.
  • Mortgage Debt: Mortgage debt in Kentucky is the fifth-lowest in the country at $126,310.
  • Credit Scores: Kentucky currently has the 12th lowest average credit score in the nation. The average credit score among residents is 698, which is in the “Good” range.
  • Auto Loan Debt: Kentucky’s average auto loan debt is $4,120. It has one of the lowest auto loan debt ratios in the United States.
  • Credit Card Debt: The average Kentuckian has around $7,154 in credit card debt. However, they are second in the nation for delinquent debt payments.
  • Bankruptcies and Foreclosures: The American Bankruptcy Institute estimates that Kentucky has the 19th most cumulative bankruptcy filings in the country. However, it also has the ninth-most filings per capita.

Debt Consolidation Services Available in Kentucky

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At O’Bryan Law Offices, we stand ready to help Kentucky residents handle a multitude of different situations, including the following.

  • Debt collectors
  • Federal student loans
  • Private student loans
  • Payday loans
  • Debt adjusters
  • Credit repair services
  • And much more

No matter what you need help with, we’ve got you covered. It’s important to be very selective while looking for a credit counseling company or a debt settlement company, as few limitations exist for those companies currently. We can help you both manage your debt and ensure fairness from debt relief companies.

What Is Debt Consolidation?

Debt consolidations involve rolling multiple types of debt, such as credit card debt, into one monthly payment. For many people, this type of debt management plan appeals to their desire for a lower interest rate. In fact, it can even be a good idea for those handling a more manageable amount of debt. It essentially allows you to combine different debts with different due dates, payments, and interest rates into one easy payment.

However, it isn’t the end-all-be-all solution for credit card debt, medical bills, federal student loans, and other forms of debt. Debt settlement companies that offer these services don’t always address poor spending and budgeting habits if you have them. Working with a Louisville bankruptcy attorney, however, will give you access to debt counseling and credit counseling. O’Bryan Law Offices don’t just provide debt relief. We also offer debt consolidation services in Kentucky and Indiana.

Those who are overwhelmed by their debt should avoid shady companies that don’t have their best interests at heart. Speak with a qualified and experienced consumer bankruptcy law firm for full balance debt resolution.

Why Choose Debt Consolidation Over Bankruptcy?

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Even though we dedicate a large portion of our practice to helping consumers file Chapter 7 Bankruptcy and Chapter 13 Bankruptcy, we also understand that it’s not for everyone. In fact, there are some notable positives to consolidating debts that don’t come with bankruptcy filings. We list these benefits below.

Bankruptcy is a matter of public record. Consolidation is not. Potential employers can find out about previous or ongoing bankruptcy proceedings.

Even though you can still keep your credit cards, it might be a good idea to stop using them until you can settle your debts. Credit card companies often shut off your cards if you file for bankruptcy. If you choose an alternative option, you can keep them for a rainy day.

Once you consolidate your debts, you won’t have to worry about multiple payment schedules anymore. You will simply make one monthly payment to one creditor.

This is the ultimate goal of consolidating your debts. Lower interest rates mean more manageable monthly payments and an easier repayment process. 

If these benefits outweigh the benefits of bankruptcy for you, we invite you to a free consultation at one of our locations. Our Kentucky bankruptcy lawyers can analyze your situation inside and out to determine which course of action is best for you.

What Kinds of Debts Can You Consolidate?

As you may know, debt is typically split into two major categories: secured debt and unsecured debt. Secured debts mean that you get something in return for payment. One example is paying a mortgage to live in a house.

Unsecured debts, however, don’t have any collateral attached to them. This means that if you don’t pay, there’s nothing that’s taken away from you. However, your credit card company extends a line of credit for you. If you can’t pay back what you owe, they can’t take your property. However, they can sue you in court for the money you owe.

You can usually consolidate any kind of debt that doesn’t have collateral. This includes credit cards, unsecured personal loans, gas cards, medical debt, and even payday loans. However, in order to start the process of consolidation, your creditors must agree to your new reduced payments. You can do this by working with a debt relief law firm and having them communicate with creditors for you. 

How Do I Settle My Debts in Kentucky?

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There are many ways to achieve Kentucky debt relief. However, we recommend that you first speak with an approved credit counseling agency. At O’Bryan Law Offices, we offer credit counseling in Kentucky for those trying to be debt-free. We will review your finances and recommend some Kentucky debt relief programs that may help you. 

What’s more is that we will design a plan of action that is fully tailored to your income, finances, and assets. We focus on helping you achieve your financial goals rather than on making money like a debt consolidation loan might. In some cases, you may find that the path you wanted to take initially just won’t work for your situation. Below, we list other Kentucky debt relief options that are available to those who owe money.

Kentucky Debt Relief Options

  • Kentucky debt settlement company: Debt settlement is a valid form of relief that many Kentucky residents find success with. However, we recommend always working with an attorney who will have your best interests in mind. Because of the lack of regulations surrounding settlement and consolidation companies, it’s best to consult with a financial professional before making any concrete decisions.
  • Debt consolidation loans: If you still have a high credit score despite your debt, you may be eligible for a low-interest consolidation loan. This is a particularly useful option for those with a lot of high-interest credit card debt. However, we still recommend speaking with an attorney before proceeding.
  • Declaring bankruptcy: This option will completely wipe out your credit card debt. However, your credit score will suffer, and the bankruptcy will be public record for the next 7-10 years. Working with a bankruptcy lawyer in Kentucky can help you decide which bankruptcy chapter is right for you. 
  • DIY debt settlement or debt management: Some people prefer to manage their debts on their own. There are plenty of DIY debt management programs available. Before committing to those programs, you can schedule a free consultation with one of our attorneys to ensure that the plan is right for you.

Kentucky Debt Relief Resources

kentucky debt relief

There are a number of state-sponsored programs and federally-sponsored programs available for the working residents of Kentucky that may help. Below, we list some of the assistance plans that could help those struggling with debt and bills.

  • Kentucky Transitional Assistance Program: This is a federally funded program that gives aid to families with children. In order to qualify for this program, the children have to live with their parents. Additionally, one family can only benefit for 60 months maximum in their lifetime.
  • Electronic Benefits Transfer (EBT): This program allows families to receive food benefits through the use of EBT cards. 
  • Kentucky Housing Corporation: This program provides housing and rent assistance for Kentucky families.
  • Community Action Agency: This agency offers financial assistance for utility and energy bills, as well as rent, food benefits, and transportation costs.
  • Medicaid Assistance: The Kentucky government gives healthcare to those who are disabled and who meet the program’s requirements. 
  • Homeless and Housing Coalition of Kentucky: This organization aims to reduce homelessness in the state of Kentucky. They create opportunities for earning money for families with low incomes.

Along with the above resources, there are many other state and federal agencies that can help those struggling with debt. Speak with an experienced attorney to fully explore your options and discuss potential tax consequences.

Is Kentucky Debt Settlement a Bad Idea?

Certain debt relief solutions work for some people, while others need different solutions. Therefore, debt settlement isn’t always a bad idea, nor is it always a good idea. It’s up to you and your attorney to determine the best solution for your specific situation. For each option, there are almost always at least a few downsides. We list the downsides of debt settlement below.

  • Your creditors might reject your settlement offer, meaning you will need to come up with a different solution. In some cases, creditors may refuse to work with you and demand that you pay more than you originally owed.
  • Credit scores are heavily impacted by debt settlement. Sometimes, consumers working with a Kentucky debt settlement company see their scores drop by around 100 points. This drop will stay on your credit report for at least seven years.
  • Higher debt is possible when working with settlement companies. With their interest rates, you might end up paying far more than you originally owed. 

How Do Debt Settlement Companies Work?

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Settlement companies are very different from DIY debt relief. While many of these companies are reputable and fair, others prey on desperate consumers looking to be debt-free. Below, we briefly outline how these companies work, as well as what to look out for.

  • Research the companies you’re looking at before doing business with them. Ensure that they are licensed and that they follow certain industry guidelines.
  • Debt settlement companies that promise perfect results should be handled with great caution. These companies cannot make guarantees about creditor agreements before meeting with those creditors. Check the Better Business Bureau and Consumer Financial Protection Bureau websites for information about specific companies.
  • Always ask about the costs before you commit to anything. If the company seems reluctant to discuss payments, it might be a sign to look elsewhere. 
  • Look at your budget before you ever start making payments. While working with a Kentucky debt relief agency, you should always ensure that you can actually afford the payments they set up for you. 
  • Once you settle on a company to work with, you can finally move forward. However, it is critical that you fully understand exactly when you are expected to pay your fees and exactly how much those fees will be.
  • Make sure that you fully understand all tax consequences before proceeding. The IRS generally taxes any forgiven debt over $600.

Why Is a Debt Consolidation Lawyer a Better Idea?

In most cases, an attorney will be a better option than a debt settlement company. They can help you with everything that a settlement company can, plus much more. Not only will they review your finances and find the best solution for you, but they will also negotiate with creditors on your behalf. Additionally, should a creditor decide to sue you, they can represent you in court. Debt settlement companies cannot.

Will Consolidating Your Debt Hurt Your Credit?

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Unfortunately, debt consolidation usually does hurt your credit score. But it doesn’t last forever. Two steps in the consolidation process can hurt your credit: a hard credit check and lowering your credit utilization ratio. However, you can steadily improve your score over time by making on-time payments. Additionally, you can also take out a personal loan to diversify your credit and improve your score over time.

Is Debt Consolidation Right For You?

The best way to determine if Kentucky debt consolidation loans are right for you is to speak with a qualified attorney. An attorney can help you make the best decisions to protect your financial future without paying more than you should to achieve debt relief. If you have credit card debt, are struggling to handle a debt collector, or are in need of a credit counselor, we’re here for you.

Contact O’Bryan Law Offices Today

debt consolidation in kentucky

At O’Bryan Law Offices, we don’t just handle bankruptcy. We also help clients from all over Kentucky and Indiana with the following issues.

If you are struggling to get a firm hold on your finances, we’re here to help. With decades of experience handling consumer bankruptcies and other financial issues, we take pride in what we do. For more information about how we can help or to schedule a free case evaluation, please call 502-400-4020 today.