If a company goes out of business do you still have to pay off your debt to them?
by admin ~ December 23rd, 2007 . Filed under: Personal Finance .
Andrew R asked:
So if Sears goes out of business in the next year, and we still have debt on our credit to them, if they do close there doors what would happen to our debt? Would we still have to pay to sears?? Thanks!
Carla Schiltz
So if Sears goes out of business in the next year, and we still have debt on our credit to them, if they do close there doors what would happen to our debt? Would we still have to pay to sears?? Thanks!
Carla Schiltz
December 24th, 2007 at 11:00 am
Yes you still have to pay.. Sears is never going out of business. NEVER.
December 26th, 2007 at 11:29 am
It is a legal contract. The receiver attempts to settle all accounts(both payable and receivable). It actually might be worse from a credit stand-point to owe money to a bankrupt firm than a solvent one. The receiver would be more apt to turn it over to a collection agency. An ongoing business would not wish to alienate a customer.
Another possibility would be the company would sell its credit card debt to a third party to raise cash. Collection actions would be persistent..
December 29th, 2007 at 7:25 pm
Yes. Retail stores work with banks who actually lend the money. Sears cards are issued by Citibank so you would actually be paying back citibank. i.e.: I have a Circuit City credit card and unfortunately I will still have to pay Chase the balance that is on it!
January 1st, 2008 at 8:50 am
Yes, if Sears ever go bankrupt like Circuit City, they’ll transfer the debt collection right to another company, such as a bank. So, you just pay a different company.
January 4th, 2008 at 3:29 am
Yes, you will still have to pay. Several years ago when Montogmery Wards went under we had a credit card with them that was one of those 0% interest deals on a washer and dryer and they just sold the account to another company. I remember having to argue with the other company over the 0% deal!
January 4th, 2008 at 7:52 am
yes, that debt is still a collectible to them. They might keep collecting it themselves or sell this debt to another company that will keep collecting it from you.
January 6th, 2008 at 10:55 am
Yes, the company will either go into receivership and they will collect the money until someone else buys the company or they sell their debts to collection companies that collect the money for them. There is no way the debt will just be wiped out.