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How Chapter 7 bankruptcy can help families with credit card debt

On Behalf of | Jan 17, 2024 | Blog, Chapter 7 Bankruptcy, Credit Card Debt

Families in Oregon may have significant credit card debt due to medical expenses from childbirth, limited income and child essentials. Chapter 7 bankruptcy could be a potential solution for some of these families facing overwhelming credit card debt.

For example, it can restructure credit card debt to make it more manageable.


The first step involves filing a petition with the Oregon bankruptcy court. The debtor must provide comprehensive financial information, including income, expenses, assets and liabilities. This initiates the process that can eventually lead to the discharge of eligible debts.

Automatic stay

An automatic stay upon filing immediately stops any debt collection activities. This offers relief from constant calls and attempts to recover debts. This pause in creditor actions lets the debtor focus on the restructuring process without the constant pressure of collection efforts.

Liquidation and debt discharge

Chapter 7 bankruptcy involves the liquidation of nonexempt assets. The proceeds go to creditors. However, not all assets are subject to liquidation.

After the liquidation may come the discharge of eligible debts, including credit card balances. Discharge means the debtor has no obligation to repay these debts.

Rebuilding credit

Chapter 7 bankruptcy provides an opportunity for families to rebuild their financial standing. As the discharged debts free up resources, responsible financial behavior post-bankruptcy can contribute to gradually improving credit scores. About 4% of the population of Eugene is younger than 5 years old. By the time 4-year-olds turn 6, their parents may be well on the way to meeting robust financial goals.

By navigating the process diligently, families can find relief from overwhelming debt and pave the way for a more manageable financial future.

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The Law Office of Kim Covington, is a woman owned debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 24 years.