GE to pay for illegal debt deals

CARSON CITY -- Attorney General Frankie Sue Del Papa said today the state will receive $350,000, and some 700 consumers in Nevada will be reimbursed as part of a nationwide settlement with General Electric Corp., involving illegal debt collection practices.

General Electric has agreed to a $27.5 million payment to the 50 states. Del Papa said figures are not available yet on how much Nevada consumers will recover.

General Electric issues private label credit cards for several retailers including Montgomery Ward, Home Depot and Levitz. An investigation by attorneys general in the states found that for four years, General Electric asked customers who filed Chapter 7 bankruptcy to sign reaffirmation agreements.

A reaffirmation agreement is a contract in which the consumer agrees to repay a debt rather than have it dismissed in bankruptcy. These agreements are valid only if they are voluntary and must be filed with the bankruptcy court. And the court must approve these agreements in certain cases.

Del Papa said the investigation revealed General Electric failed to file the agreements with the court. Del Papa said customers involved in this practice will have their debt stricken, and General Electric will waive any right to repossess the merchandise.

The customers also will be reimbursed or receive credit for finance charges and penalties charged by General Electric.

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