Hard as it is to work up much sympathy for deadbeats, the picture of a big corporation pressuring desperate debtors is not a pretty sight.
It was hardly the softer side of Sears on display last week, but quick admission of a corporate foulup showed savvy damage control.
Sears, Roebuck and Co. acknowledged “flawed legal judgment,” in many cases involving people who filed for Chapter 7 bankruptcy, a process that liquidates many assets but ultimately discharges their obligation to pay off debts.
Some Massachusetts debtors and a Boston bankruptcy judge said Sears pressured customers by telling them their purchases would be repossessed if they did not repay their debts. Many signed so-called reaffirmation agreements to continue paying off the retailer. While the voluntary agreements must be filed with courts for approval, many were not, which meant Sears was collecting on debts that legally had been wiped out. The cost to the company in restitution and fines could run to hundreds of millions of dollars.
