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Legislation would ban credit card companies from colleges

In this tough economy, many recent college graduates in Tennessee and Georgia are struggling with high student loan and credit card payments. Now one state is taking steps to prevent students from getting in over their heads with credit card debt. The east coast state's legislature recently approved a bill that would ban credit card companies from marketing to students on the campuses of public colleges. The bill awaits the governor's signature.

Some schools already do not allow credit card companies to solicit on campus. The concern is that students will be persuaded to open accounts they cannot afford to repay, in part because they are not aware of the high interest rates charged by credit card companies. If these students do not find a well-paying job when they graduate, they may find themselves unable to make even the minimum payments due under the credit card agreements.

Those who find themselves buried in overwhelming debt have the right to seek relief through a personal bankruptcy filing. Unlike student loans, credit card debt is generally dischargeable in personal bankruptcy. If the debtor qualifies for a Chapter 7 bankruptcy, creditor harassment will be stopped immediately upon filing, due to the automatic stay provision of the Bankruptcy Code. A Chapter 7 bankruptcy usually results in the complete discharge of most debt.

Those debtors who do not qualify for Chapter 7 can still seek relief under Chapter 13. Rather than a complete discharge, Chapter 13 is a reorganization that results in a payment plan to creditors, with some creditors taking less than the full amount owed.

Source: The Daily Journal, "Ban on credit card companies at colleges advances," Dec. 24, 2012

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