The Softer Side of Sears’ Ruthless Debt Collection

When you’re out of job and aiming to repay a loan, the chances of you reaching a sympathetic representative is like finding a needle in a pit of jagged, used syringes.

But Amy somehow managed to find one with Sears / Citicards. The rep was very understanding about her situation. He offered her a solution: she could pay back a very small amount every month, to be autodeducted from her account. After a year, she’d be bumped back up to her previous minimum payment.

An excellent, understanding, human compromise: the sort of thing we like to air clap here at the Consumerist. Amy loyally paid the agreed upon amount.

Of course, that didn’t stop Sears / Citicards from selling her account to a collection agency anyway… whom, needless to say, was a lot less understanding about her situation.

Amy’s email, plea for advice after the jump:

I have an account with Sears/ CitiCards which I had to default on because of a job loss. When I called to make arrangements with them, the rep was very understanding of my situation and offered me an arrangement for a small payment amount for a year after which the payment amount would go back to the original minimum payment (a re-aging of the account). When I received a letter from a collection agency only 9 months later ( I had been making the agreed payments the whole time) I called to see what the deal was. They said that the amount was insufficient and the account was charged off and sent to the recovery dept. without notifying me that there was a problem with the original agreement or what their intentions were. They admitted that sending it to a collection agency was a mistake and recalled the account. When I called after the agreement for the year was up to make new arrangements, they told me I had to make an outrageous “down payment” and then monthly payments after that. All the while, they have been collecting the original agreed upon payments on the same day each month. And they cannot seem to locate the person I made the agreement with or explain to me how they can sell my account to an outside collection agency and charge it off while continuing to collect the payments I originally agreed to. And that I can’t do anything about it because I didn’t receive a letter from them stating what the original agreement was. I’m so sick of dealing with rude, heartless creditors who wouldn’t care if you were laid off and living under a bridge. They want their money and try to scare you with statements such as “You are forcing us to pursue taking legal action”‘ or “we will turn this matter over to our attorney”.Or they start asking all kinds of questions about how much your mortgage payment, utilities, and car payments are. I even had a rep from Credit Management Services rattle off my and my husband’s SS numbers to me without verifying my identity. All over $300. I had a rep from West Asset Management rag me out for having DSL. For crying out loud, I operate a business from home now and I use the internet a lot. Not to mention, there are usually penalties for cancelling your service before your contract is up, so you can’t just discontinue service when things get tough…then the collection agencies will be calling you about that too. What else can I do?

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  1. ChazB says:

    This doesn’t surprise me. Before we met, my fiance’s friend had a Sears account that he had kept in good standing. He paid it off, or so he thought, and forgot about it. Apparently he had neglected to pay literally a few dollars and for some reason it was sent to collection. I think collections were still internal then for our area but I’m not 100% sure. Regardless, the collectors came after him for an account that was worth less than the Starbucks latte that most people drink each day. Even after he paid them off, they kept calling him. It took him a few months and repeated times prooving that he’d paid to get them off his back. In the end, I don’t know if they stopped calling him but I do know that the local Sears call centre was closed and all the employees were laid off. Great thanks for their persistance at the whips of their corporate masters.

  2. LTS! says:

    You avoid this situation by not allowing yourself to get into it in the first place. If you need to run a balance on a credit card, let alone a department store card at 20%+ interest you’ve got a serious problem and you probably should not have purchased whatever you bought.

    She was lucky enough that they allowed her to reduce payments for awhile. You can argue that they could be a little more understanding but we all know they aren’t. It still doesn’t change the fact that putting yourself in poor financial straights it your own fault.

    Sound fiscal planning will tell you to have three months emergency cash for these situations. Moreover, go get a job immediately after losing yours, even if it’s minimum wage or temp work. It offset income loss.

    I’m not sympathetic, she got more than she probably should have.

  3. Falconfire says:

    Screw off LTS! you dont know situations. Without getting into the fact that the corperate world WANTS you to be in debt (they make more money off you when you cant pay it) I had a issue in college thats still 7 years later not resolved because they screwed up a loan payment (sent it back to Sallie Mae without crediting it to my account) that even though solved with the school STILL results in threatening letters to me from a asshole creditor who cant understand I paid it off and the school is in good standing.

    The fact is creditors almost never pursue legal action (too much money) and they know you will never pursue it (again too much money to) so they continue to harras you until something finally happens with either them losing you, or you finally giving in and paying them too.

    Shit happens, how do you know that the writer didnt need a refrigerator because of a incident, or what have you. People sometimes have to make tough choices when they dont have money between either being in debt or having a needed item to provide. How many times have you had your car break down right when you least had the money for it, or a emergancy that places you in the hospital with mounting bills.

    Your right its best to not be in debt and to not use those store cards, but most people cant, the system is designed to make the rich richer and the middle and lower class poorer and unable to get beyond that without working your ass off and pinching every penny.

  4. Pelagius says:

    The crux of the problem seems to be that she was already paying Sears
    while the collection agency tried to squeeze money out of her as well.
    Why should she pay two entities for the same debt?

    A similar situation happened to me with another store card – i.e. I’d
    come to an arrangement and paid it off with the credit company, then
    started receiving calls from the collections agency. Turned out that
    there was a communications breakdown at the card company. Fortunately I
    had the agreement in writing plus a copy of the cancelled check from
    the bank. In the end, however, it took intervention from the PA Att’y
    General’s office to get the collection agency off my back.

  5. etinterrapax says:

    I don’t know much about Sears’s debt collection practices, but this doesn’t surprise me. Unless something has changed since I learned this, Sears retains a security interest in everything you buy with a Sears card. That means that if you stop making the payments, Sears can and will repossess the merchandise. They also routinely show up at bankruptcy hearings where they are a named creditor, to repossess or claim their share of the debtor’s assets. My understanding is that they are among the only retailers to do this.

    Unfortunately, Amy, since you don’t have the agreement in writing, you don’t have much recourse unless you can hire an attorney who can dig into this and prove otherwise. My advice is to pay off the debt any way possible and consider it an important lesson learned about credit responsibilities. If the collection agents are still harassing you after the debt is paid, my advice changes. For now, just be glad they aren’t impounding your car.

  6. Karmakin says:

    Well, I had my student loans sent of to collections (clerical error, to be honest). One company was good to work with, we just set back up the payment schedule and all was good. No harm no foul there.

    The other company? Damn that was just hellacious. They refused to accept a single payment, they wanted the whole thing paid within 48 hours or they threatened a lawsuit. I told them to pound sand, and sent in payments. In order to accept payments they said, I needed to give them all mine, and anybody in my families’s bank acount information, on a form that gave them permission to withdraw any amount of money as they wished.

    Again, I told them to pound sand, and continued to send in payments. I have a stack of money order receipts. (I don’t trust them enough to send a check), when I pay it off I’ll just stop.

    These companies need stricter oversight.

  7. Amy Alkon000 says:

    LTS is right. I feel very sorry for Amy, but too many people see being in debt as a natural course of business in life. It’s completely stupid to have a practice of spending more than you can pay for. I never buy anything I can’t afford, and pay my credit card bill in full (I use only one) off every month. I use a credit card to buy things to get frequent-flyer miles, but I think of it as a debit card. So much of what people think is necessary in this country — ie, vast TV, new car, etc. — is not. How many of you have brand new cell phones all the time? Why? I have a Sony Ericsson I got almost four years ago. It still works…why would I buy another?

    I’ve learned a lot by going to France a lot. They live much more simply than we do. Their socialist system is stupid, but they enjoy the little things in life much more than we do, I think. Women there don’t buy tons of clothing, but a few nice things. They have wonderful fresh food, and not the vast aisles of packaged crap we do. On the negative side, they all seem to be mad about brands more than we are, and then, there’s the commie pinko thing, with low salaries and high tax rates. I’m not anti-American — far from it — we could just learn from a society that’s a little less “consumerist” than ours.

  8. DeeJayQueue says:

    any time anyone puts up a post about collections agents or credit cards there has to be someone to say the obligatory “Well you shouldn’t have spent the money anyway… sucks to be you!”

    Yeah, it’s true, you shouldn’t spend more than you make but that’s not helping her now, and it isn’t the point of her story anyway.

    Unfortunately, there isn’ t much of a silver lining to this. Without written proof you don’t really have an agreement at all, which is probably why Sears sent your account to collections in the first place. As long as it’s still with Sears you can send almost any amount and they can’t do much about it. It’ll look bad on your credit, but I suspect that’s not too great at this point either. If all you owe is $300 I would try to impose on a friend or family member for the money and pay the credit off, then pay the friend off as you can.

  9. Sam Glover says:

    From my blog:

    This is exactly the kind of conduct that the Fair Debt Collection Practices Act was enacted to prevent. It isn’t about the debt, it is about treating debtors like people, not dirt. We’re a long way from medieval debtors’ prisons, where debtors would hang baskets out of their jail cell windows, trying to collect enough coins to satisfy their debt and be released.

    Among other things, you can sum up conduct the FDCPA prohibits by referencing section 1692(d), which prohibits: “any conduct the natural consequence of which is to harass, oppress, or abuse any person.”

    Each violation entitles a debtor to $1,000 or actual damages (which include emotional distress), plus their reasonable attorney fees. Punitive damages are also available. Those are big teeth.

    If you are being harassed by a debt collector, start taking detailed notes of phone calls (who, when, how long, and as much detail about the conversation as possible), and check my post on recording phone calls. If recording is allowed where you live, you should record every phone call from or to a debt collector so their FDCPA violations are indisputable.

  10. LTS! says:

    Falconfire – you mean corporate america wants you to spend money.. wow. Also, do they force you to? No.

    Look, the point is I should have addressed the issue but that has been done eloquently by Sam.

    Simply put I’ve told these people they are harassing me and that they are more than welcome to take legal action as I have retained an attorney myself and the next time they call improperly I will be forced to take legal action myself. It works (if you are in the right, if you are not they will just laugh at you).

  11. Lawyer here. Obligatory disclaimer about not being able to give specific legal advice without the specifics of your situation, and that you should contact a lawyer in your jursidiction for specific legal advice.

    That said, my husband does collections work as a lawyer for the companies, and I do collections work as a lawyer for the people being collected from. Here’s a few tips:

    1) ALWAYS ALWAYS ALWAYS get it in writing when you agree to a repayment schedule. I see clients all the time who had a repayment schedule worked out via telephone and who then get taken to court anyway because the company refuses to honor what their representative agreed to.

    2) Deal with it before it goes to a collections service, if at all possible. Most are relatively sleazy. Company customer service can be a pain in the butt, but they’re not as sleazy as most collections agencies.

    3) If it has gone to a collections service, DEAL WITH THEIR LAWYERS. Don’t deal with the collections agents or “customer service” reps. Ask to speak to a lawyer. (They may not let you do so unless something has already been filed with a court.) The lawyers are nicer (insert lawyer joke here). They are usually not being paid a “commission” based on how much money they can get from you. They are ethically and legally prohibited from doing certain things that collections agents can do (varies by jurisdiction). They really don’t want to have to go to a courthouse in the middle of nowhere, or hire someone to do it three states away, to try to collect from you. That gets expensive for them.

    4) It MAY be worth your time and money to hire a lawyer to negotiate with the collections agency’s lawyer on a repayment schedule. This typically takes no more than two hours, and it’s all on the phone, so if it’s a very large debt, this may be a worthwhile investment.

    5) If you make below a certain amount (sometimes less “priority” debts like student loans, varies by jurisdictions), you are “judgment proof.” Announcing to debt collectors that you make so little that even if they take you to court and win, they can’t actually collect any money, often makes them more willing to deal. Your county legal aid can probably give you the specifics on what constitutes “judgment proof” in your jurisdiction.

    6) Sometimes there’s not a lot you can do to get “fair” treatment without spending an arm and a leg on legal fees. (I am currently being screwed for $800 by AT&T (on a non-debt matter) even though I’m a lawyer because taking it to court would cost more than they’re screwing me for.)

    7) The Better Business Bureau and State Attorney General can help you (for free) deal with debt collections issues that won’t die even after you’ve paid them — or if you never incurred the debt in the first place.

    8) I once had a sleazy magazine subscribe me to their magazine via a “we’re sending you our magazine! If you don’t want it, send this back” that I threw out as junk mail, send me to debt collections for $12. I went ballistic and called the company and they asked why I didn’t want their fine magazine. I said, “Other than the fact you just sent me to debt collections for a bill I didn’t incur? Because your magazine features hyper-thin models that encourage anorexia and body-image problems in young women by promoting an impossible standard of female beauty while claiming to support feminist ideals and celebrate women. I find your magazine unethical and disgusting and it makes me feel fat.” The customer service rep was silent for almost a full minute, then cancelled my subscription, apologized, took it out of collections, sent me a confirmation letter saying they’d dealt with it (so I’d have proof if I had problems), and got it taken off my credit report.

    So maybe the thing to do is tell the company their product makes you feel fat and makes young girls contract eating disorders.

  12. Please, LTS! & Amy Alkon, this is neither the time, nor the place to judge from your neocon high horses. You’re obviously absolutely perfect people with perfect credit, perfectly exorbitant salaries, and perfectly coifed ass hairs. Spotless little lambs. But this woman is asking for advice on a consumer/credit issue, not a flogging by strict-father-morality Republicans. Yes, credit card debt is bad, but for many people, revolving debt is a necessary evil. Most people I know aren’t able to afford major emergencies, even Republicans.

    Keep paying Sears, but stay on them. Call them regularly, and find out the status of your account. Write down every detail of each call, then ask them to mail or fax you a written form of anything to which you agree. And find out what recourse you, as a citizen of your state, have with the collection agency. Many states have strict laws regarding debtors’ rights. Hell, the federal government will even protect you to some extent. Google “debtors’ rights,” contact your state attorney general’s office, or call a company like Consumer Credit Counseling Service for advice.

    You should be able to write a letter to the collection agency stating that you acknowledge your debt, and are paying it, but request that you not be contacted by the collection agency. Unless things have radically changed, you have this right. Use it, and the harassment portion of the program should slow down tremendously. Good luck on finding another job and keeping the evil overlords off your ass.

  13. Amy Alkon000 says:

    Neocon? Um…I’m one strange neocon, linking to a piece by Matt Yglesias today on my blog about the obscene cost of the war in Iraq. If it’s really neocon to be prudent about spending, the Democrats are in big trouble.

    The truth, in my case, is much more pedestrian. I’m from the Midwest, and my dad taught me never to spend more than I have. I’m big on personal responsibility, too, so I’ve always had health insurance, even at my struggling writer poorest (the point at which I was living in New York and sleeping on a door — not like a bat, but I had the door propped up on two milk crates because I couldn’t afford a mattress). The health insurance thing was something I did in case I ever got extremely ill, so my parents wouldn’t feel compelled to mortgage their house to pay for my care — or worse yet, leave me on public health assistance.

    I feel sorry for Amy, but when I read LTS’ comment, I was reminded of how natural and normal so many Americans think it is to live on credit…to pay companies huge sums of money so they can have a brand new TV all the time. Clearly, I’ve hit a nerve — as has LTS before me — hit people right in their bad values.

  14. Ben Popken says:

    Samuel writes:

    “Hi there, I just read Amy’s e-mail about her problems with the debt collectors Sears has been sending her account to. She should know (as should all your readers), that there is a federal law with very large teeth that protects debtors like Amy. The Fair Debt Collection Practices Act prohibits all kinds of abusive practices, including lying (like saying they will sue if they really aren’t going to), calling incessantly, yelling, etc. Basically, if they are doing something you consider unfair or overly intrusive, it is probably prohibited.

    A consumer can recover $1,000 per violation or actual damages (which include emotional distress), plus their reasonable attorney fees. If someone is being harassed by a debt collector they should (1) make a detailed log of all phone calls from or to the debt collector, and (2) check the laws on their state on recording phone calls, and if permitted, record every phone call. Voicemails should be saved and preserved, as well.

    To find out whether you can record, I have an excellent guide–“Can We Tape?”–linked from an article on my website. Here’s the link: http://www.sjglover.com/articles/taperecording.htm

    Most consumer lawyers will take cases on contingency, and will only charge if they win. Consumer lawyers–and consumer lawyers who practice in FDCPA–can be hard to find. Start with the yellow pages or QwestDex looking for “consumer lawyer” and call around until you find someone who specializes in FDCPA work. The good news is that since the FDCPA is a federal law, you can also try looking for attorneys in other states, as it isn’t difficult to take cases in other states, just more costly. But since most debt collectors are in other states, FDCPA cases usually involve travel, anyway.

    One last thing. This isn’t about the debt. The FDCPA controls how debt collectors can collect the debt. In short, it mandates that debt collectors have to treat debtors like real people, not like dirt. Imagine that!”

  15. Youch. I just wanted to say if you look at that picture on this post too quickly, it looks like something completely different. I thought it was a profile shot instead of front on.

  16. hm…i got behind on a sears account that had maybe $500 outstanding, then a little over a month ago i was able to start making payments again. i’d been paying on their website (double the minimum, every two weeks instead of monthly- i want to be done with this) when last week the site locked me out. i guess i should be looking forward to the collections letter.

  17. thrillhouse says:

    for the Amy in the letter-

    So yeah, I guess we’ve learned that debt is stupid? It’s been such a blessing in your life thus far….

    That aside – never give them a dime on a settlement or new payment plan without getting it in writing first. Because Carlos doesn’t work there anymore (he’s two cubicles down), and we don’t make settlements (lie), and blah blah blah. Collectors are scum and you can tell when they are lying by the fact that their mouth is moving. Sears is notorious for this.

    NEVER, EVER:
    – take a verbal agreement – get it in writing
    – give access to your checking account – they’ll clean it out in a heatbeat
    – borrow money again – the borrower is slave to the lender, and I think you realize that now.

  18. AcidReign says:

    …..Amy Alkon’s father is very wise (as is she!). Credit is a trap. Use it only for emergencies.

    …..It’s true that preaching won’t do the Amy In Sears Distress any good at this point, if it keeps anyone else out of this sort of situation, it’s worth it. There’s lots of good advice in the comments above. Hopefully some of it will help her!

  19. thrillhouse says:

    yeah, thats just what you need to do – finance your emergencies. the last thing you need in an emergency is a loan.

  20. Ben Popken says:

    Robert writes:

    “Creditors can employ or sell the debt to a debt collection agency that will chase the outstanding debt. They are not Bailiffs and have very little power to collect the debt and should be treated the same as any other unsecured creditor.

    Though personally – since she has no contract between her and the collection agency I don’t see how they can go after her “

  21. thrillhouse says:

    Robert-
    Sears has contracted them to collect the debt. They’re just a hired gun. If they sell the debt, then its no different than your bank selling your mortgage. It doesn’t matter if you don’t specifically agree to terms with the new company. You just owe the debt. And they can take you to court where you will lose. Tho they rarely do.

  22. parke says:

    I work for CitiCards as a manager for the Sears Credit Portfolio. Agents (collectors) are bonused each month based on “balances saved,” that is, the dollar amount of the accounts for which at least a minimal payment was secured, thus “saving” the account from charge off. The agent Amy talked to set up a multiple monthly payments (called a “stabilization”). The payment amount however changes each subsequent month because the account is not brought current, interest is added, a late fee is added, the balance grows, and the “stabilization” amount increases. So let’s say Amy set up six payments of $40. The following month the stabilization payment was $42 and following that, $44, and then $48, etc. The account continues through delinquency and ultimately charges off. During this time the customer is called every 3-5 days to discuss the account that she thinks has an arrangement in place with monthly auto-drafts set up. This arrangement when it was first set up benefited the collector, who was credited with “saving” the balance, thus increasing his/her bonus for that month. This is the primary concern of many collectors. And it why Amy thought she had an arrangement to hold the account when in fact she did not. Citi will argue that the customer should realize that interest and fees being added to the account increase the balance despite the payments, and that the montly statements show the past due amount, which is also increasing monthly. But make no mistake: Citi takes full advantage of consumers who are not savvy. Unfortunately, a great many consumers fall into this category. That is why Citi Cards is the largest credit card company in the world.

  23. grazman says:

    I just got a call from the debt collector to whom sears sent my debt. I lost a job this past February, and am currently working part time while looking for full time work. After explaining to the rep on the phone, and told her I could make small payments, she basically said there was nothing she could do about the payments and would notify sears of the information I told her. She also followed up with a comment that sears could take whatever steps they could here in California. What do I do?