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Credit limits rejected

(Associated Press)/WASHINGTON -- A Democratic effort to limit credit amounts on cards for minors met defeat Tuesday in the Senate. Legislation to make it harder for people to erase debts in bankruptcy court drew closer to passage.

Senators voted, 55-42, against a proposed amendment by Dianne Feinstein, D-Calif., that would have imposed a $2,500 limit on any credit card issued to someone under 21 unless a parent co-signed the account or the minor could demonstrate sufficient income for a higher credit limit.

Feinstein's provision responded to growing concern about widespread marketing of credit cards to young people, especially college students, who often have no income or credit record. In the worst cases, critics say, students who run up big debts are forced to drop out and work full time to pay them off.

"It's almost impossible for students on campus to avoid credit card offers," Feinstein said, alluding to the tables on or near campuses loaded with free T-shirts, Frisbees and other gifts to lure students to apply.

In 1999, some 6.8 percent of personal bankruptcy filings were by minors, up from 1 percent in 1996, according to Feinstein.

The vote rejecting her amendment hewed closely to party lines in the evenly divided Senate.

A wider vote, 61-37, trounced a proposal by Sen. Edward Kennedy, D-Mass., to remove from the bill a $1 million cap on the amount of Individual Retirement Account benefits that can be shielded from creditors in bankruptcy court.

The broader legislation to overhaul bankruptcy laws overwhelmingly passed the House on March 1, and President Bush has signaled he will sign the measure if it reaches his desk.

In recent days, Democrats in the Senate have been proposing a series of amendments aimed at tempering the legislation but have been rebuffed each time.

The legislation was vetoed in December by then-President Clinton, who contended it would hurt ordinary people and working families that fall on hard times. It has been pushed by the banking, credit card and retail credit industries, while consumer groups and unions have opposed it.

A Senate vote is expected Wednesday to choke off debate and set a final vote on the measure, the most sweeping overhaul of bankruptcy laws in 20 years.

After days of debate in the Senate, the House and Senate versions of the legislation were similar. Negotiators from the two chambers would have to meld the versions into one after Senate passage.

In the most significant difference, the Senate measure contains a provision prohibiting people found to have blocked others from obtaining any legal service from using bankruptcy proceedings to escape fines and civil judgments. There is no similar provision in the House bill.

The Senate provision is a compromise springing from an earlier amendment by Sen. Charles Schumer, D-N.Y., related specifically to people found to have violated laws protecting abortion clinics.

Personal bankruptcies in the United States reached a record 1.4 million in 1998, despite the strong economy, up more than 300 percent since 1980. The rate declined to about 1.3 million in 1999 and 1.2 million last year.

The bills are S. 420 and H.R. 333.

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(c) 2001 Associated Press

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