DebtHammer's free guide to debt relief details several options for Kentucky residents, including hardship programs, consolidation and other financial resources.

Debt Relief in Kentucky

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Kentucky is home to 4,512,310 people. The average resident makes $48,170 annually (mean wage) and owes $37,890 in consumer debt (excluding mortgage). The state ranks 48th in terms of poverty rate with 16.3% of residents living below the federal poverty guideline.

If you’re a Kentucky resident who needs debt relief or economic help, or if you’re interested in learning more about your rights as a consumer, here’s what you should know.

Are you eligible for debt relief?

If you’re a Kentucky resident, DebtHammer may be able to help.

Kentucky debt statistics

Here are some of the most recent debt-related statistics about Kentucky that illustrate what residents are facing:

  • Average household debt/Total debt per capita: $37,890
  • Average student loan debt: $32,779
  • Average credit score: 702
  • Median mortgage payment: $1,158
  • Bankruptcies: 15,151
  • Personal income/Annual Mean Wage: $48,170
  • Child poverty: 21.3%
  • Unemployment: 4.0%

Debt relief options for Kentucky residents

If you’re struggling to find debt relief in Kentucky, here are your best options:

  • Debt settlement: This process typically involves going through a debt settlement agency to negotiate with your creditors and reduce your debt to a smaller amount.

READ MORE: Best debt settlement companies in your area

  • Debt consolidation loans: These loans combine several smaller debts into one loan with a single monthly payment. If you have good credit, the new loan could come with a lower interest rate, which could save you money in interest fees.
  • Debt Management Plan (DMP): A DMP is a three- to five-year program that can help you better handle your debts. With one, you can set up a better repayment plan, reduce interest rates, or waive late fees and other charges. They’re offered through credit counseling companies.
  • DIY plans: A DIY debt settlement plan works similarly to regular debt settlement but doesn’t involve going through an agency. Depending on your goals and situation, it could reduce how much you owe, lower interest rates, or waive late charges.
  • Bankruptcy: There are two main types of personal bankruptcy — Chapter 7 and Chapter 13. Depending on your circumstances, filing for bankruptcy could be what’s needed for a fresh start. Consult an attorney before going this route to ensure it’s right for you.

Debt settlement in Kentucky

Debt settlement isn’t for everyone, but it could work for you if you:

  • Have fallen behind on regular bills
  • Are frequently or regularly using high-interest loans (like payday loans), cash advance apps, or credit cards to make ends meet
  • Can’t keep up with multiple monthly payments on other debts

With a debt settlement plan, your creditors will agree to accept a payment that’s smaller than what you originally owed on a debt. These plans can help with:

  • Lines of credit or credit cards
  • Personal loans
  • Department store cards
  • Old judgments
  • Student loans in default
  • Other unsecured consumer debts

Pro tip: Most people settle debts with the help of a debt settlement company. Someone from the company will work with your creditors on your behalf to try to reduce your debt — sometimes by up to 50%.

During the process, you’ll need to make monthly payments into a secured account until you have enough to pay the remaining balance in a lump sum. The debt settlement agency may also request that you stop making payments on the debts you’re trying to settle. This could lead to late fees or added interest charges to your account. It could also damage your credit score.

READ MORE: How does debt settlement work?

Kentucky debt relief companies

One of these top Kentucky debt relief companies may be able to help if you need help with debts:

  • Xpert Credit Repair: This company offers an initial free consultation and specializes in credit repair services. It can also refer you to a debt settlement agency or a qualified Consumer Credit Attorney if you need help with a lawsuit. It works in several states, including Kentucky, but its main address is 1409 Botham Jean Blvd. Ste 239, Dallas, TX 75215.
  • New Era Debt Solutions: This Kentucky debt settlement company has 4.92 out of 5 stars on BBB and an A+ rating. Their headquarters are located at 330 Wood Rd., Suite B Camarillo, CA 93010.
  • InCharge Debt Solutions: Accredited on BBB with an A+ rating, this company provides debt settlement services and debt solutions in many states, including Kentucky. Their main address is 5750 Major Blvd Suite 300 Orlando, FL 32819-7971
  • Pacific Debt Relief: Operating in Kentucky, this company offers debt relief and debt settlement for credit cards, personal loans, and other consumer debts. Its main address is 750 B Street Suite 1700 San Diego, CA 92101.

Debt settlement attorneys

If you’re looking for a debt settlement attorney in Kentucky, here are some of the top-rated ones:

READ MORE: Debt settlement attorneys: Do you need one?

Debt resources for Kentucky residents facing hardship

Kentucky residents have many options when it comes to debt relief programs, but the state also offers various resources to help those who are struggling financially. These resources include ones that can help with:

  • Mortgage or rent assistance
  • Utility bill payment
  • Healthcare assistance
  • Childcare costs
  • Food and nutrition help

State hardship programs

For residents seeking other financial assistance besides debt relief, Kentucky offers quite a few state-specific programs. Some of these programs are also available through Kynect Benefits.

  • Rental Assistance: This resource helps low-income individuals find affordable housing homes and connects them to other resources through the Department of Housing and Urban Development.
  • Homeless housing and rental assistance: The website connects residents seeking rental and housing assistance to different programs that can help. One such program is the Housing Stabilization Program, which helps renters with short- and long-term housing.
  • Single Family Housing Repair and Grants Program: The Section 504 Home Repair program provides loans to people who need to improve their homes or address safety concerns on the premises. It’s available to very low-income residents.
  • Low Income Home Energy Assistance Program: LIHEAP is a federally funded program that assists people with their heating bills, especially during the winter months.
  • Children’s Health Insurance Program: Programs like KCHIP and WIC offer children in Kentucky low-cost or free benefits to subsidize the cost of healthcare.
  • KCHIP: The Kentucky Children’s Health Insurance Program is for children under the age of 19 who need free health insurance. Families must make less than 213% of the federal poverty level to qualify.
  • SNAP – Supplemental Nutrition Assistance Program: SNAP is a federal program that subsidizes the cost of food for low-income earners.
  • WIC: This supplemental food program helps ensure women and children have affordable, nutritious food. It also provides relevant educational resources.
  • Kentucky Transitional Program: K-TAP is essentially Kentucky’s version of TANF (Temporary Assistance for Needy Families). It offers financial assistance to low or very low-income individuals for up to five years. Team Kentucky has more information.
  • Organization for Refugees & Immigrants: This resource connects people with different immigrant and refugee services, such as the Office for Globalization and Kentucky Refugee Ministries.

Food assistance

According to a recent study, almost half of Americans struggle with the cost of food. In Kentucky alone, 575,300 residents face hunger – one in eight people.

While the state does have certain charitable programs in place, such as the Supplemental Nutrition Assistance Program (SNAP), these programs aren’t always enough. That’s where Kentucky’s food banks and pantries come in.

Food banks can help bridge the gap by providing people with essential, nutritious food to help combat hunger. Here are some food banks and pantries throughout the state:

 For a comprehensive list of food pantry locations in Kentucky, go to

Debt collection laws in Kentucky

When it comes to debt collection, Kentucky complies with the Federal Trade Commission (FTC), which enforces the Fair Debt Collection Practices Act (FDCPA). The FDCPA prohibits third-party debt collectors (not the original creditor) from using unfair, deceptive, or abusive tactics to collect a debt.

In 2020, Kentucky’s Attorney General Cameron initiated Operation Corrupt Collector to work in conjunction with the FTC and protect consumers from debt collection schemes. Together with the federal debt collection law, this Operation includes the following:

  • Companies cannot try to collect debts they aren’t legally owed or that don’t exist
  • A debt collector cannot claim to be a law enforcement or government official
  • Debt collectors cannot threaten individuals with arrest or suspension of their license in order to collect a debt
  • Companies cannot harass the borrower about a debt
  • Certain restrictions apply to debt collectors when it comes to contacting an individual at home or at work

Additionally, the Attorney General offers advice on what Kentuckians should do to avoid getting involved in a debt collection scam. For example, they should:

  • Find out who’s contacting them and why
  • Get the debt validated before sharing personal information
  • Not respond to threats and instead contact the Office of Consumer Protection and report suspected fraud to the FTC
  • Do their due diligence about the debt (ex. find out who the original creditor is and if they sold the debt to the company contacting them)
  • Dispute any debts that aren’t legitimate

For more information about debt collection, credit counseling, debt management, and debt settlement, refer to Kentucky’s Office of the Attorney General.

Income and employment in Kentucky

The current unemployment rate in Kentucky is 4.00%. This is slightly higher than the USA unemployment rate of 3.5%. However, it’s a significant improvement from what it was in April 2020 — 16.50%.

Kentucky ranks 23rd with 1,997.30 new jobs (in the thousands). This makes the state average when it comes to job growth.

The state of Kentucky has right-to-work laws. This prevents employers from requiring new employees to join a union as a condition of employment. In some cases, this could mean less job security and little representation in the workplace.

Kentucky is also an employment-at-will state. This means a company can legally fire an employee for any reason (except illegal or discriminatory ones) unless there’s a contract stating otherwise. This may lead to less job security.

How to apply for unemployment benefits in Kentucky

To apply for unemployment insurance, go to the Kentucky Career Center Unemployment Insurance website. This page will tell you when the system is available and the services for which you could apply. Common services include filing your initial claim, requesting biweekly benefits, or checking your eligibility. If you’re unable to complete the application online, you can call the center at (502) 875-0442.

If you don’t already have one, you’ll need to create an account. Otherwise, you can log in using the UI portal. Once logged in, you can file a new unemployment claim.

Information you might need includes:

  • Social Security Number
  • Mailing address
  • Date of birth
  • Employer information (including business name, address, phone number, dates of employment, and reason for no longer working)

Banking and taxes in Kentucky

Kentucky has an individual income tax rate of 5%.

Around 5.2% of Kentucky residents are unbanked. This means they have neither a checking nor a savings account. Unbanked individuals are sometimes at higher risk for predatory lenders (like payday loans).

Kentucky housing market

Around 67.8% of Kentucky homes are occupied by the owner. The average home value in Kentucky is $207,028, up 12.6% from 2021. In comparison, the average home value in the USA is $357,544 (up 12.3% from 2021).

The median mortgage payment for a home in Kentucky is $1,179. The cost of renting an apartment depends on a few factors, such as the location and square footage. For example, the typical rent in Louisville, Kentucky is $1,158 for a 935-square-foot apartment.

If you’re a Kentucky homeowner who’s been impacted by COVID-19 and is facing foreclosure or the loss of utility services, the Kentucky Homeowners Assistance Fund could help. This fund offers up to $60,000 in direct financial assistance to eligible homeowners. The program is currently accepting applications and will continue doing so until the funds run out or until September 30, 2025.

Retirement in Kentucky

The average Kentucky resident has $441,757 saved for retirement. In order to live comfortably during retirement, however, it’s recommended to have at least $621,914 set aside.

Average Kentucky insurance premiums

Most Kentuckians spend about $2,128 a year on full-coverage car insurance or $748 for minimum coverage. This is higher than the estimated national average of $1,706.

The average homeowner insurance premium in Kentucky is $1,820 a year. This is around $500 higher than the national average.

Payday lending status in Kentucky: Legal

Payday lending is legal in Kentucky, but payday lenders must follow certain rules when underwriting loans. For example:

  • Maximum loan amount: $500
  • Maximum Interest Rate (APR): $15 for every $100 of principal, which can be prorated for the amount borrowed
  • Minimum loan term: 14 days
  • Maximum loan term: 60 days

Statute of limitations on debt in Kentucky

Kentucky’s statute of limitations on debt is four to 15 years, depending on the debt type.

  • Medical debt: 5 years
  • Credit card: 5 years
  • Auto loan debt: 4 years
  • State tax debt: 15 years

Help for Veterans

As of 2022, Kentucky was home to an estimated 295,000 Veterans. Many of these Veterans are facing financial hardships like unemployment or homelessness. Fortunately, there are resources available to help.

Facilities in Kentucky

These are the main VA facilities in Kentucky:

Employment resources for Veterans

Kentucky offers many resources to help Veterans. The following organizations and websites exist to help Veterans find employment and transition into the civilian workforce.

  • CareerOneStop has career resources, job advice, and a job search portal for Veterans.
  • has worked with 1.4 million Veterans and spouses to find civilian jobs.
  • offers online career fairs for Veterans and military families to make it easier to find employment.
  • Helmets to Hardhats is a nonprofit program that connects Veterans and active military personnel to construction jobs.
  • Hiring Our Heroes helps Veterans and active military members find employment through networking events and other career-related resources.
  • My Next Move also helps Veterans use their military-earned skills in a civilian career.
  • Warriors to Work connects companies and Veterans while helping veterans prepare for job interviews and applications.

The bottom line

Kentucky residents who need debt relief have options ranging from debt settlement to debt management plans. The state also has a multitude of resources and programs to help people through direct and indirect financial assistance. If you need help, don’t hesitate to reach out to one of these organizations.


How long can a debt be collected in Kentucky?

It depends on the debt being collected. For example, mortgage debt can be collected for up to 15 years, while credit card debt can be collected for five years.

When does the statute of limitations begin in Kentucky?

The statute of limitations on debt typically begins on the date of the last payment or action on the account.

Am I responsible for my spouse’s debt if I get divorced in Kentucky?

In Kentucky, all debts are considered either marital or non-marital property. If the debt is considered non-marital property, then it belongs to the spouse who acquired it. This tends to happen if the debt existed before the marriage. Martial property debt is debt gained by either spouse during the marriage. Kentucky has equitable division laws, meaning debts are split based on each spouse’s financial situation (not always 50/50). This could mean that you’re responsible for some of your spouse’s debt.

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