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For more than two years, special-education teacher Fetemeh Hosseini worked a second job to keep up with the $2,000 in monthly payments she collectively sent to five banks to try to pay off $25,000 in credit card debt.

Even though she hadn't used the cards to buy anything more, her debt had nearly doubled to $49,574 by the time the Sunnyvale, Calif., resident filed for bankruptcy last June. That's because Hosseini's payments sometimes were tardy, triggering late fees ranging from $25 to $50, and higher interest rates, ranging from the mid-teens to nearly 30 percent. When the additional costs pushed her balance over her credit limit, the credit-card companies slapped on additional penalties.

"I was really trying hard to make minimum payments," said Hosseini, whose financial problems began in the late 1990s, when her husband left her and their three children. "All of my salary was going to the credit-card companies, but there was no change in the balances because of that interest and those penalties."

Punitive charges -- penalty fees and sharply higher interest rates once a payment is late -- compound the problems of many financially strapped consumers, sometimes making it impossible for them to dig their way out of debt and pushing them into bankruptcy.

Bankruptcy experts say that too often, by the time an individual has filed for bankruptcy or is hauled into court by creditors, he or she has repaid an amount equal to their original credit-card debt plus double-digit interest, but still owes hundreds or thousands of dollars because of penalties.

"How is it that the person who wants to do right ends up so worse off?" asked Cleveland municipal judge Robert Triozzi last fall when he ruled against Discover in the company's breach-of-contract suit against another struggling credit cardholder, Ruth Owens.

Owens tried for six years to pay off a $1,900 balance on her Discover card, sending the credit company a total of $3,492 in monthly payments between 1997 and 2003. Yet her balance grew to $5,564.28, even though, like Hosseinei, she never used the card to buy anything more. Of that total, over-limit penalty fees alone were $1,158.

Triozzi denied Discover's claim, calling its attempt to collect more money "unconscionable."

The bankruptcy measure now under debate in Congress has been sought for nearly eight years by the credit card industry. Twice in that time, versions of it have passed both the House and Senate only to falter. Credit-card companies say current law needs to be changed to prevent abuse and make more people repay a portion of their debt. Consumer groups and many Democrats say consumers who seek bankruptcy protection often do so because they have fallen on hard times through illness, divorce or job loss. They also argue that current law has strong provisions that judges can use to weed out those who abuse the system.

Opponents also argue that the legislation is unfair because it ignores loopholes that would allow rich debtors to shield millions of dollars during bankruptcy through expensive homes and complex trusts, while ignoring the need for more disclosure to cardholders about rates and fees and curbs on what they say is irresponsible behavior by the credit-card industry.

No one knows how many consumers get caught in the spiral of "negative amortization," which is what regulators call it when a consumer makes payments but balances continue to grow because of penalty costs. The problem is widespread enough to worry federal bank regulators, who say nearly all major credit card issuers engage in the practice.

Two years ago regulators adopted a new policy that will require credit-card companies to require monthly minimum payments high enough to cover penalties and interest and lower some of the consumer's original debt, known as principal, so that if a consumer makes no new charges and makes monthly minimum payments, his or her balance will begin to decline.

Banks agreed to the new rules after, in the words of one top federal regulator, "some arm-twisting." But bank executives persuaded regulators to allow the new, higher minimum payments to be phased in over several years, through 2006, arguing that many customers carry so much debt that even slight increases could push many into financial disaster.

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