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BAKER ANNOUNCES MULTI-STATE CONSUMER SETTLEMENT

PRESS ADVISORY

BAKER ANNOUNCES MULTI-STATE CONSUMER SETTLEMENT

August 7, 1998

ATLANTA - Georgia Attorney General Thurbert E. Baker today announced that General Electric Credit Corporation (GECC), which issues dozens of private label credit cards, together with Montgomery Ward Credit Corporation, has agreed to pay over approximately $87.5 million as part of a multi-state settlement arising out of the company's unlawful debt collection practices from consumers who had declared bankruptcy.

GECC and Montgomery Ward Credit will pay a total of approximately $60 million to at least 60,000 consumers nationwide from whom it collected invalid debts. In addition, the companies will pay the States Attorneys General $27.5 million to be used primarily for consumer protection and education programs.

Georgia consumers will be reimbursed approximately $839,000.00. GECC and Montgomery Ward will also pay the State of Georgia approximately $290,000.00, which is the state's share of the nationwide payment based upon the percentage of violations that occurred in Georgia.

GECC issues and administers private label credit cards for a number of retailers, including Montgomery Ward and Levitz. The Attorneys General investigation confirmed that GECC had solicited customers who filed Chapter 7 bankruptcy to sign a contract agreeing to repay their debt rather than have it dismissed in bankruptcy. GECC then failed to file those agreements with the Bankruptcy Court as required by law. The practice has been going on for at least four years.

Under the settlement, affected customers identified by GECC (using a process overseen by the Attorneys General) or through a claims process, will:

§ Have all their "reaffirmed" debt stricken and GECC will waive any rights to repossess the merchandise; § Be reimbursed or receive credit for finance charges, and penalties charged by GECC, and be reimbursed for any monies paid on the reaffirmed debt plus 10% interest;

§ Those potentially affected customers not identified by review of GECC's records will receive a notice and short questionnaire to determine eligibility, and will receive complete restitution if they signed a reaffirmation agreement that was not properly filed.

A reaffirmation agreement is a written contract by which a Chapter 7 debtor agrees to repay a debt that would otherwise be discharged in bankruptcy. These agreements can be valid if they are voluntary, provided they are filed with the bankruptcy court and, in certain circumstances, approved by the bankruptcy court.

GECC and Montgomery Ward also have agreed to an injunction that will prohibit them from collecting, upon reaffirmation, agreements that were not properly filed and to accurately disclose to their bankrupt customers their rights in connection with reaffirmation agreements proposed by the creditor.

The improper reaffirmation practices first came to light when a multi-state task force of Attorneys General spearheaded the investigation and settlement of a similar claim against Sears in 1997. Thereafter, the Attorneys General uncovered similar conduct by other major creditors, including Montgomery Ward and GECC.

Over 46 states participated in the multi-state agreement.

Consumers who filed for bankruptcy, signed a reaffirmation agreement with GECC, and believe the agreement may not have been filed properly with the bankruptcy court may contact the Georgia Governor's Office of Consumer Affairs at (404) 656-3790 for more information.