Some Kentucky residents who are struggling with debts might consider entering into debt management plans through their local credit counseling agencies. With these plans, debtors pay back all of their unsecured debts at lower interest rates that are negotiated by their credit counselors. However, 40 to 45 percent of people do not complete their debt management plans.

With a debt management plan, the person submits one payment each month to the credit counseling agency, which then disburses the individual payments to the creditors for the person. These plans may last for five years and require people to adjust their financial habits significantly. Normally, people will not be able to use or obtain new credit while they are on their debt management plans. This means that they will need to save up money for emergencies should they occur.

People using a debt management plan usually need to maintain strict budgets for several years in order to complete their plans. This may mean that they may have to forgo extras while focusing on paying off their debts. Some people may find that filing for bankruptcy may be a better option for them.

With Chapter 7 bankruptcy, most of a person's unsecured debts are discharged if the bankruptcy petition is successful. This means that the debtor will no longer be obligated to pay them. Chapter 13 bankruptcy also has a payment plan that lasts between three and five years. Unlike debt management plans, however, non-priority unsecured debts are repaid at a fraction of their balances. At the end of the repayment plan period, the remaining unsecured debt balances are discharged. People who are struggling with high levels of debt might want to speak with a bankruptcy law attorney. A lawyer might be able to advise his or her client about the best approach for the client's financial situation.