DATE: Thursday, September 4, 1997           TAG: 9709040431

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY TOM SHEAN, STAFF WRITER 

                                            LENGTH:   45 lines

SEARS AGREES TO PAY 1,800 VIRGINIANS $1.5 MILLION OVER BANKRUPTCY ACTIONS THE RETAILER FAILED TO WIPE OUT ITS CUSTOMERS' DEBTS.

Sears Roebuck & Co. will return $1.5 million to more than 1,800 Virginia residents who agreed to repay the retailer while in personal bankruptcy, Virginia's attorney general said Wednesday.

As part of a nationwide settlement, Sears also will pay $411,000 to Virginia for use in consumer protection and antitrust matters, the office of Attorney General Richard Cullen said.

The agreement with Virginia and 49 other states addressed Sears' failure to file documents on behalf of customers who filed for Chapter 7 bankruptcy, which would have wiped out their debts.

In many cases, Sears had these customers reaffirm their debts to the company but did not file the agreements with the bankruptcy court as required.

Sears also was accused of bullying some of these customers to repay what they owed the company, which violated federal bankruptcy law. Reaffirmation agreements are legal only if individuals in bankruptcy sign them voluntarily and they are filed with the court.

Earlier this year, Sears said it had identified 146,000 customers whose reaffirmation agreements were not filed with the bankruptcy court between 1992 and April 1997.

Customers who signed reaffirmation agreements between 1987 and 1992 may be eligible, but they will be required to file a claim form.

Consumers who reaffirmed their debts to Sears and whose agreements were properly filed will not be eligible to participate in the settlement, a spokesman for the Virginia attorney general said.

As part of the settlement with state attorneys general, Sears agreed to pay $125 million to customers. It also will release customers from another $125 million of obligations to repay the company.

In addition, Sears will pay $35 million of penalties to the 50 states and $5 million for consumer education. Sears also agreed to change its debt-collection practices.

A spokesman for the Virginia attorney general said Sears will notify customers who are eligible for the repayments. However, individuals who have not been contacted and think they may be eligible can get information about filing a claim from a claims administrator.

That office can be reached by a toll-free number, (800) 529-4500. The deadline for contacting the claims administrator is Oct. 8.

Send Suggestions or Comments to webmaster@scholar.lib.vt.edu