NEW YORK — The credit card scandal that hit Sears, Roebuck & Co. on April 10 is spreading to other retailers.
Montgomery Ward Holding Corp., which is wholly owned by General Electric Capital Corp., was sued Monday on charges of violating personal bankruptcy codes as part of its credit card operation. A similar suit hit May Department Stores Inc. last week.
The suits, filed on behalf of individuals who had claimed personal bankruptcy, contend that the creditors collected payments on reaffirmation agreements that were not filed with the bankruptcy courts.
A personal bankruptcy frees a debtor from the legal obligation of paying credit card debt. In a reaffirmation, a creditor agrees to accept legal liability for the debt. However, the bankruptcy code requires that these reaffirmations be filed with the court.
The latest suits were filed in the U.S. District Court in Chicago, while the Sears suit was filed in Boston. However, the suits were filed by some of the same law firms, including Edelman & Combs in Chicago and Grant & Roddy in Boston.
Dan Edelman, principal at Edelman, said his law firm was looking into filing suits against other retailers but declined to mention names.
Sears was hit by at least two shareholder lawsuits since the disclosure of its liability on the reaffirmations.
Sears has agreed to repay all funds collected under unfiled reaffirmations and also give each debtor a $100 Sears gift certificate.
Sears has stated that it did not know the full extent of its liability, but that its 1997 earnings would be “materially” affected by it.

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