Secured or unsecured debt?

Credit cards are considered unsecured.

Secured would be a mortgage or auto loan.

I sincerely doubt that they are going to come and take your wife's ring back. I would contact them and try to work something out. More than likely they will sue you.

Heck no, if they tried to get my ring, or my gal's ring, I would say "oops, I lost it"

The store cards work a little differently than traditional credit cards. With store cards, very often, they are actually secured by the goods you buy at that store. If you read the receipt on a store card, it acts as a conditional sales contract. They retain a purchase-money security interest in the goods until paid for.

Granted they probably won't come knocking on your door to ask for a ring back. But they could go to court for a replevin order, and a judge would tell you to give the ring back. (As MoK suggests ... What if you say you lost it? -- well I don't know, but if you lie under oath and they can prove it then you can go to jail for perjury.

Even if they can, they probably won't try to get the ring back. They'd probably do like any other credit card and rather sell the account. If you have been saving up, just call them and see if they will settle something.

Yeah, I've heard stories of Sears trying to get washers, etc. back!!

When my ex's mother declared bankruptcy she had about 7 things she got on a Sears card. They told her to pay a reduced fee, like $400 for a $1,500 Television or give it back.

Even if didn't work? (insert evil smile here)
lol. Oops, the TV fell off the stand!!

Hey I just bought some drywall and a toilet on my Lowes card. I wonder if they would sue me for the materials back if I didn't pay it. Hehe. I really doubt they would attach the ring if it ever went to court unless the ring was really really expensive like 100k expensive. I suspect it would take the same path that any other credit card would take. If you have the money I would try to settle the debt and be done with it.

Sears is bad about trying to recover items, they tried to repo my lawn mower after the debt was discharged in BK

A lot of times when you go bankrupt, if they do have a valid security interest, they will try to get you to reaffirm or give back the merchandise. Kind of their way of having the last word.

I believe they (Sears) should've tried to recover the merchandise BEFORE the BK discharge. If they tried to recover items AFTER a BK discharge, isn't that breaking the law?

Sears is a little different now. A few years ago Sears sold off their Charge Card unit to Citibank. So now its basically a Sears branded Citibank charge account. Ultimately, It would be Citibank's decision on how they would proceed.
As to the original poster, this is from the terms and conditions you agreed to when you opened up the account:


You can view these terms and conditions in their entirety on Kay Jewelers website . It looks like Kay Jewelers does their own financing. I don't know if that makes them more or less likely to work with you to resolve the account.

No...it's like filing BK with a mortgage--the debt can be wiped, but that doesn't mean the debtor owns it.

Don't they have to petition thru the courts to get the merchandise back?

Desperately - If the case is ongoing, then yes ... they have to motion to modify the stay. Basically they have to give the court a good reason why they want to go take the collateral (and there are many valid reasons).

BUT with secured creditors, even though there is a stay of collection, the court expects the debtor to either reaffirm, redeem or surrender the security. That is the law. If you do neither of those before your case gets discharged, then the stay of collection ends and creditor can enforce its security interests. Albeit the debt was discharged - so they cannot call you for money; but the security interest was not discharged and so they can call you to get the merchandise back.

debtcruncher...so does a credit card like sears...is it considered secured or unsecured? I thought it was unsecured, so if items were purchased, then BK is filed, if sears doesn't object and BK is discharged, then sears has no claim.

Just curious! Thx.

Credit Cards are generally unsecured. There are exceptions though. Many banks have secured cards that are tied to an account. The amount in the account is the limit on the card. BOA has a great secured card program that can be upgraded to an un-secured card after a 6-12 month history of responsible usage. Store cards are alos considered open-ended accounts in some states whereas bank cards are written accts for SOL purposes. Sears is one creditor that, more often than not, will do everything they can to get something out of a consumer filing BK whether return of merchandise or negotiating some form of re-payment.

But the question is: is if someone bought something using a sears CC and files BK and sears doesn't submit an objection during BK process, after BK, can sears try and take the item.

Once your BK is discharged.....no.

That's what I thought, however, someone mentioned in this thread that sears tried to reclaim the property after a BK. It just sounded weird.

Sears DID TRY to reclaim a riding mower AFTER BK. I told them they could find most of the parts in my garage; never heard anymore from them.

I want to clarify that a security interest does not get discharged in a bankruptcy (albeit the overlying debt does). If you do not reaffirm, redeem or surrender the collateral, the creditor does not need to file any objections; because the court expects you to do one of those three things, if you don't then even after the case is discharged the creditor can still try to realize on the security.

My company finances automobiles. In a case where someone files BK on a car loan, they usually reaffirm the debt and keep paying in order to keep the car. Inevitably, however, some people think they get a free car by going BK -- they neither reaffirm, redeem nor surrender the vehicle to us. If they do neither of those three things before the case is discharged, then that stay lifts, and it is legal for me to repossess the vehicle. In that case I don't need the court's permission (or let me rephrase that, and say, I already have the court's permission because the debtor did not redeem, reaffirm or surrender while the stay was in place.)

Security interests act the same whether it is a car or a toaster. If Sears had a PMSI in the chattel goods, then they can demand the property back even after the case is discharged (the only ramification being that they cannot try to recover money, only the property).

They aren't going to spend a lot of money to try to get the goods back (because they cannot charge you for those collection costs). So to spend $300 trying to repossess a broken lawn mower is a waste for them. But in a case like mine where there's a $16K car in limbo, we will pay the $300 to go out and repossess it.

So, I guess, one has to read the fine print in a credit card application to determine if the bank maintains a security interest in an item. Since credit cards are revolving credit, it may be difficult to determine what was actually paid in full and what is still being financed.

Hello My Name is Dana and I've been a Bankruptcy Paralegal for about 12 years. A Kay Jeweler's account is considered Purchase Money Security as defined on the back of your card member agreement.

This would make it a secured debt. The reason they can do this is because they actually extended the credit for a specific item listed on the sales receipt. It you read the receipt you will see the fine print and that they do hold the debt secured and the ring as collateral.

However, I can tell you that typically that don't pursue the repossession of the ring. To them it's not worth the cost involved to force you to turn it over. Instead they will harass you and have collection agencies call you all the time.

I recommend consulting an attorney to see if you qualify for a Chapter 7 liquidation. If you are delinquent on your home or car then maybe a 13 will be better. Either way they will get rid of all that debt.

Thank
Email removed as per TOS ~DC
Good Luck!

I have a secured loan with a finance company.....If I file a chapter 13 can they take the collateral I listed to obtain the loan?

When you file 13, there will be a stay in place ... in other words, they cannot take any collection action without the courts permission.

Now if your plan doesn't call for adequate protection payments to them, or if you are currently uninsured, then they can motion to modify the stay and the court may let them proceed with a repossession. But as long as you are following the BK plan, they will not be able to repossess.

I had filed for bankruptcy last year and all my debt was discharged in January 2010. One of my accounts discharged was an account with Kay Jewelers. I just recieved a summons from an attorney (Weltman, Weinberg,& Rei) requesting several jewelry items I had purchased using my credit card account with them. I no longer have any of those items. Most were purchased as gifts for other people several years ago and the rest I sold to be able to hire an attorney to file my bankruptcy.

I can't believe they would try to get the property back now months after the bankruptcy and not during the bankruptcy.

I contacted the attorney who handled my bankruptcy. He was of no help. He told me my options were this, I could ignore the summons, they would win by default and they could have the sheriffs come to my house to get the property. or I could pay my attorney $500 + the court time and he could answer the summons for me, but I'd still have to go to court for the hearing. or I could answer the summons my self ( which would seem the better option since it wouldn't cost me and I still would have to go to court with or with out an attorney).

But even that is next to impossible since I have a debilitating disability and an home bound. I just don't know that to do.

This debt was discharged in bankruptcy so any legal action to collect on it is a violation of the FDCPA and possibly your state laws. You should find a competent consumer lawyer who has experience not only defending these lawsuits, but also suing debt collectors and their lawyers. Because this was discharged in bankruptcy, they should be paying you at least $1,000 plus other damages including your lawyer fees to defend the bogus lawsuit. You can find a lawyer nationwide at www.naca.net or in .

Joe Smith, thank you for your response. It has made me feel a little better and confident. I will pursue this by contacting an attorney who specializes in this area.