By JIM BARON

PROVIDENCE — You may think of your credit card debt as a sort of loan — money you borrow to make a purchase that you will pay back in monthly installments. But that is not how the credit card companies look at it.

According to a panel of experts convened by U.S. Senator Sheldon Whitehouse for a Senate Judiciary Committee field hearing at Rhode Island College Thursday, the credit card industry does not see what you owe as a debt to be repaid, but as a “perpetual earning asset” that will keep you sending them money every month without ever paying it off fully.
Rather than wanting to get paid off, explained attorney John Rao of the National Consumer Law Center, if you are paying even a small amount on your bill each month, the bank that issued your card   considers you an active account and the money you owe is booked as an asset. The more you owe, the bigger an asset you are to the bank.
Late fees, over-limit fees and hikes in interest rates, the four-person panel told, all conspire to keep credit card holders in debt they can never quite manage to free themselves from.
Once these extras start to add up, said Robert Lawless, a law professor and expert in bankruptcy and corporate law, borrowers find themselves in a “sweat box” where they are unable to make all their payments on time, but aren't in enough financial trouble to declare bankruptcy. It is during that period, he said, that the interest and fees skyrocket to a level where there is no hope of getting out from under the debt.
Lawless noted that Americans now owe five times more in household debt than they did 50 years ago and twice as much as 10 years ago.
Whitehouse said the hearing was aimed at “using bankruptcy law to protect those who fall prey to abusive credit card interest rates” and used it to promote the Consumer Credit Fairness Act (CCFA) which would modify the bankruptcy law to disfavor “abusive lenders.”
“Credit card companies kick consumers when they are down,” the senator declared. “The practices of the credit card industry are unfair, and, I believe, unsustainable — they could lead to another financial  collapse unless Congress acts.” 
Among the key points of the CCFA is one that would put “abusive” lenders – those charging more than 15 percent higher than the yield on long-term Treasury notes, which is currently 4.4 percent – at the end of the line in a bankruptcy proceeding.
“In the vast majority of cases,” Whitehouse explained, “these lenders would recover nothing at all if their customers entered bankruptcy.  It makes sense that lenders won’t want to risk not getting paid, and so I hope this bill would encourage lenders to keep their rates below the threshold, and not push their customers into bankruptcy.”
Also, he said, it would give debtors who are on the verge of bankruptcy leverage to negotiate with the card issuer that could prevent them from going over the edge.  He said it sends a message to the industry that “if you are charging these abusive rates, you are likely to lose.
The measure would also undo several provisions of the bankruptcy reforms pushed through Congress in 2005.
Asked why legislators would pass a bill that runs counter to the law they approved just three years ago, Whitehouse told The Times, “a new president, a new majority controlling Congress. He also said some of the better companies might see that abusive practices could result in a “death spiral” for the industry and may move to accept reform that shakes out the industry's excesses.
Whitehouse noted during the hearing that one bill presented to Congress would put a ceiling on credit card interest rate at 36 percent and remarked “think for a minute of the world where Congress has to consider capping interest rates at 36 percent.”
John Chung, a professor at Roger Williams University law school, noted that at 36 percent interest, a $1,000 debt would double in less than two years (about three years at 25 percent), and will redouble again every two years.
“Once a debtor falls into the trap of exponential debt growth,” Chung said, “can such a person ever climb his or her way out? I highly doubt it.” Invoking Tennessee Ernie Ford, Chung added “perhaps we are witnessing the 21st century equivalent of the company store, where the debtor is just another day older and deeper in debt because he has sold his soul to his credit card issuer.”
A. Thomas Small, a bankruptcy judge from North Carolina,said that pre-bankruptcy “credit counseling
 does not work,” and amounts to “another obstacle” and cost to the borrower.