The second largest city, Lexington, is situated just inside of Fayette County, Kentucky. Referred to as the Horse Capital of the World, Lexington houses over 314,000 residents. On average, each household brings in about $49,778 each year. The unemployment rate of this region is at a low of 3.6 percent. While most of the city residents are employed, there is still a poverty rate of 18.9 percent.
How Can Debt Relief Help?
Those who are not making enough to cover the costs of their debt can get caught in a vicious cycle that continues to spiral out of control. Their payments become late due to lack of funds, which means more money will be due because of late fees. This just continues on and on. Debt relief is there to help these individuals stop the cycle, develop a way to settle their debt, and avoid filing for bankruptcy.
Where Can You Find Debt Relief In Lexington?
Lexington has multiple locations that can help you with debt relief programs and become more financially knowledgeable. AAA Credit Counseling Corporation, Consumer Credit Counseling Service of Central Kentucky, Integrity Financial Counseling, and Trinity Trust Financial Services all can help you with your debt.
What Exactly Is Debt Relief?
Debt relief comes in a variety of forms to help you take better control of your finances. These include credit counseling, debt management plans, debt consolidation, and debt settlement. Your current financial situation will determine which method of debt relief you need. Let’s take a more specific look at what these different forms are.
This is when you speak to a counselor who is knowledgeable in financial well-being about your current financial situation. They will evaluate your debt and income. In most cases, the counselor will start by giving you a budget and suggest the best form of relief that is ideal for your financial situation.
Debt Management Plan
- Many Are Non-Profit Free Counselors
- You Get A Professional Recommendation
- You Get A Direction Of How To Get Out Of Debt
If your debt is starting to get out of control, but most of your accounts aren’t in the collections phase, this is probably the ideal option for you. This is where a credit counselor will speak with your creditors to help decrease your monthly interest rate and payments. With this program, you still have to pay back the principal amount that you borrowed, however, your repayment is restructured in a way that you can afford it.
In most cases, the counselor agency will actually manage the repayment of your debts. You will be instructed to send one monthly payment to the agency, and they will then disperse your payment amongst your creditors.
- One Monthly Payment
- Stops Late Payments and Fees
- Setup With An Affordable Monthly Budget
This program is one of the most well-known forms of debt relief. This works by taking out a loan big enough to cover all your existing debt. The idea is two-fold. You get a simpler payment scheme where you only have to worry about one payment each month for all of your debts. Secondly, this new loan is typically at a lower rate than most of your debt accounts, such as your credit cards. This will typically save you money in the long run, depending on the length of the loan.
- One Monthly Payment
- On Average, Lower Interest Rate
- Make Debt Repayment Simpler
This form of debt relief is usually the last stop before filing for bankruptcy. With debt settlement you hire an agency to negotiate with creditors on your behalf, to settle your existing debt for less than you owe. For this program to work you need to save money in an account for lump sum payoffs to creditors. The settlement firm will typically instruct you to stop paying the creditors and advise you to start funding an escrow account. This can appear adversely on your credit as your lenders will be marking your payments as delinquent until they come to a settlement with the agency.
- Settle Debt For Less Than You Actually Owe
- One Monthly Payment To Escrow Account
- Financial Burden Is Lessened As An Agency Controls Your Finances
Who Qualifies For Debt Relief?
Anyone who owes debt can qualify for some forms of debt relief. Typically those who are struggling with a couple late payments each month benefit more from credit counseling and debt management. Those who owe large amounts of debt and are months behind on their commitments, benefit more from debt consolidation and debt settlement.
Debt Relief Laws You Should Know
Kentucky falls under the federal jurisdiction of the Fair Debt Collection Practices Act (FDCPA). This Act outlines how debt collectors may go about collecting on debt and the rights the consumer have during the process.
On a state level, Kentucky has their own Statutes of Limitations that outline how much time a lender has to take legal action against a borrower before they forfeit their right to do so. For oral agreements and open accounts, this time is 5 years. For written contracts and promissory notes, this time is 15 years.