Filing for Chapter 13 bankruptcy in Oregon can help you manage overwhelming credit card debt while keeping your assets. Unlike Chapter 7, which eliminates debt, Chapter 13 restructures it into a repayment plan. This allows you to pay off a portion of your debt over time based on your income and expenses.
Restructuring your debt
Under Chapter 13, credit card debt is classified as unsecured debt, meaning it is not tied to collateral like a house or car. The court consolidates your debts into a repayment plan lasting three to five years. You make monthly payments to a bankruptcy trustee, who distributes funds to creditors. Your payment amount depends on your disposable income after essential expenses.
Reducing or eliminating balances
Credit card companies may only receive partial repayment under Chapter 13. If you complete your repayment plan, the court may discharge any remaining credit card debt. However, this depends on how much you were able to pay throughout the plan. In many cases, people end up paying only a fraction of what they originally owed.
Stopping interest and fees
Once you file for Chapter 13, an automatic stay goes into effect. This prevents credit card companies from charging additional interest, late fees, or penalties. The automatic stay also stops collection actions, including lawsuits, wage garnishments, and harassing phone calls. This protection remains in place as long as you comply with your repayment plan.
Credit impact and rebuilding
Chapter 13 bankruptcy affects your credit score, but it also provides a structured way to regain financial stability. Since you repay part of your debt, it may be less damaging to your credit than Chapter 7. After completing your repayment plan, you can start rebuilding credit through responsible financial habits, such as making on-time payments and keeping credit balances low.
