The retailer has started the process of running going-out-of-business sales across its fleet and selling off its assets.
Conn’s CEO Norman Miller said “a convergence of factors contributed” to the decision to file for bankruptcy.
The decision to acquire rival retailer W.S. Badcock late last year is one of them. The move generated costs that added to Conn’s liquidity challenges, Miller said in court documents.
“The acquisition of Badcock last year was arguably a mistake and has cost the company time and capital,” Neil Saunders, managing director of GlobalData, said in an email to Retail Dive. “Expanding in a very soft market was an error.”
While the height of the COVID-19 pandemic generated a spike in consumer spending on home decor purchases, increasing inflation and interest rates have dampened discretionary buying, Miller said.
“Conn’s is very much a victim of the slowdown in demand for home goods,” Saunders said. “Because consumers are under financial pressure and because they are not moving home as much as they once did, sales have slumped. The impact of these things has been sharper on Conn’s than for other retailers, partly because it has a lot of consumers on more modest incomes who rely on credit, which is now more expensive to service.”
According to Conn’s, about 61% of purchases were financed through Conn’s in-house credit program during the company’s 2024 fiscal year; 23% were financed through third-party or lease-to-own terms; and about 16% of purchases were made with cash or credit cards.
Conn’s relied on the issuance of debt to support its cash flows for operations and strategic initiatives in recent years. However, due to increasing interest rates, Miller said interest rate expenses increased from about $26 million for the year ended Jan. 31, 2021, to nearly $83 million for the year ended Jan. 31, 2024.
Of the $77 million Conn’s said it spent on 350 leases in fiscal year 2024, over $35 million of that figure was related to underperforming stores. The merger with Badcock also resulted in some redundant store locations, exacerbating what the company termed “location functionality.”
The increase in interest rates and costs of capital, coupled with the prospect of minimal to no relief in the near term, has negatively affected the company’s ability to manage its debt obligations, Miller said.
Conn’s began selling appliances in Texas in 1937. At the time of its bankruptcy filing, the company said it employed about 3,800 people and had 553 corporate and dealer retail stores across 15 states, 22 distribution and service centers and six corporate offices. Badcock was founded in 1904 in Florida. Before its deal with Conn’s, the company had 64 corporate locations and 310 independent dealer-owned stores.
Let’s face it – we’ve all been there. Money gets tight, bills pile up, and suddenly you’re staring at your Conn’s HomePlus statement wondering what happens if you just… don’t pay it. Whether you purchased a new sofa, refrigerator, or entertainment system, the reality of those monthly payments can sometimes hit harder than expected.
I’ve helped many folks navigate these tricky financial waters, and I’m here to walk you through exactly what happens when you stop paying your Conn’s bill – from those first missed payments all the way to potential legal consequences.
The Early Stages: What Happens Immediately
When you miss a payment on your Conn’s HomePlus account the clock starts ticking immediately. Here’s what typically happens in those first crucial days
- Contact attempts begin – Conn’s billing agents will try reaching out to you and possibly your references to arrange payment
- Late fees kick in – Expect about $15 in late fees, though this can vary based on your specific contract
- Promotional perks vanish – If you’re 10+ days late, say goodbye to any no-interest financing through YES MONEY
- Interest backdating – Conn’s will charge back interest starting from your original purchase date (ouch!)
It’s worth noting that this policy applies even if you’re almost done paying off your contract. So even if you’ve made 23 payments on a 24-month contract, missing that last payment by more than 10 days could trigger retroactive interest on the full original purchase amount!
Moving Into Default Territory (30+ Days)
If you continue ignoring those bills and phone calls for about 30 days, things start getting more serious:
- Your account gets officially declared in default
- The entire remaining balance becomes due immediately
- Additional account default penalties (specified in your contract) are added
- Conn’s typically sends your account to collections at this point
One customer told me, “I thought I could catch up the next month, but by then they were demanding the full balance plus fees. It was way more than I could handle!”
The Collections Phase
Once your account hits collections the pressure really intensifies
- Frequent calls from collection agents
- Letters demanding payment
- Credit score damage from missed payments being reported to credit bureaus
- Possible contact with your employer or references
This is usually when most people start seriously considering their options – and for good reason. The collections process can be stressful and have lasting financial consequences.
Legal Consequences: Can Conn’s Sue You?
Yes, Conn’s Appliances can and does sue customers who default on their payments. After attempts to collect the debt through their normal channels, Conn’s may hire law firms like:
- Scott & Associates, P.C.
- Rausch Sturm LLP
- Johnson Mark LLC
- Javitch Block LLC
These firms specialize in debt collection and creditor rights and they have extensive experience winning these types of cases.
What To Do If Conn’s Is Suing You
If you’ve received legal papers indicating Conn’s is suing you, don’t panic – but don’t ignore it either! Ignoring a lawsuit is probably the worst thing you can do, as it almost guarantees a default judgment against you.
You typically have only 14 days to respond to a lawsuit, depending on which court is handling your case. Here are your main options:
1. Mount a Legal Defense
Possible defenses against a Conn’s lawsuit include:
- Statute of limitations – In Texas, creditors have 4 years to file a debt collection lawsuit
- Identity theft or mistaken identity – If you never financed with Conn’s
- Incorrect debt amount – If Conn’s is claiming you owe more than you actually do
2. Negotiate a Settlement
Even if you do owe the debt, you may be able to negotiate a settlement for less than the full amount. Debt collectors often prefer settling outside court since it’s less expensive than litigation.
3. Consider Bankruptcy
In severe financial hardship, bankruptcy might be worth considering. This can:
- Discharge unsecured debts
- Stop collection activities immediately
- Provide a fresh financial start
Can Conn’s Garnish Your Wages?
Here’s some good news if you live in Texas: the state doesn’t allow wage garnishment for most types of debt collection! While Conn’s may obtain a judgment against you, they cannot garnish your wages to collect on that judgment.
However, they may be able to:
- Garnish your bank accounts
- Place liens on your property
- Seize certain assets
Voluntary Surrender: A Possible Option
If you know you can’t continue payments, contacting Conn’s about voluntary repossession of the items might be worth considering. While this won’t necessarily clear your debt entirely, it can sometimes reduce what you owe and demonstrate good faith.
The Impact on Your Credit Score
Not paying your Conn’s bill will definitely hurt your credit score. Late payments, collection accounts, and court judgments can all appear on your credit report and may remain there for up to seven years.
My friend Jake ignored his Conn’s bill after losing his job, and his credit score dropped nearly 100 points within three months. It took him years to rebuild his credit afterward.
Will You Go to Jail for Not Paying?
This is a common fear, but the simple answer is: No, you won’t go to jail just for not paying your Conn’s bill.
In the United States, we don’t have “debtor’s prisons.” You cannot be imprisoned simply for failing to pay a consumer debt. However, if you’re sued and ordered by a court to appear for proceedings related to the debt and you ignore those orders, you could potentially face legal consequences for contempt of court – not for the debt itself.
Practical Steps to Take If You Can’t Pay
If you’re struggling with your Conn’s payments, consider these steps:
- Contact Conn’s customer service – Explain your situation; they may offer extensions or payment plans
- Prioritize your debts – Focus on necessities like housing, utilities, and food first
- Look into financial assistance programs – Various programs might help with essential expenses, freeing up money for debt payments
- Consider credit counseling – Nonprofit organizations can help you develop a debt management plan
- Consult with a debt defense attorney – They can explain your rights and options if collection efforts have escalated
Real Examples of Conn’s Collection Practices
I’ve talked with several customers who’ve gone through the Conn’s collection process. Sarah from Houston told me: “They called constantly after I missed two payments. Then they started calling my workplace and the references I’d provided when I opened the account. It was embarrassing and stressful.”
Another customer, Marcus, shared: “I received a lawsuit notice about six months after I stopped paying. By then, the amount they claimed I owed had nearly doubled with fees and interest.”
Protection Under Federal Law
It’s important to know that you have rights even when facing debt collection. Federal laws like the Fair Debt Collection Practices Act (FDCPA) protect consumers from harassment and illegal collection tactics. While this law may not apply directly to Conn’s, it could apply to the attorneys or collection agencies working on their behalf.
Additionally, the Telephone Consumer Protection Act (TCPA) protects consumers from excessive robocalls. Interestingly, Conn’s has faced lawsuits in the past for alleged robocall harassment.
Final Thoughts
Missing payments on your Conn’s bill can lead to serious consequences – from late fees and retroactive interest to collections and lawsuits. While you won’t go to jail for the debt itself, the financial impact can be significant and long-lasting.
If you’re struggling with Conn’s payments, the worst thing you can do is nothing. Being proactive – whether by contacting them to work out a payment arrangement, seeking legal advice, or carefully considering your options – will almost always lead to better outcomes than simply ignoring the problem.
Remember that financial difficulties happen to almost everyone at some point. The key is addressing them head-on rather than letting them spiral out of control.
Have you dealt with missed payments on a Conn’s account? What was your experience like? I’d love to hear your stories and questions in the comments below!
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What to do when you can’t pay your bills
FAQ
Can Conns sue me in Texas?
Conns Appliances files lawsuits throughout the State of Texas for debt collection.
What happens if you never pay off your debt?
After several months of non-payment, creditors may charge off your debt and sell it to a third-party collection agency. This can lead to more aggressive attempts to recover the money as well as damage to your credit score. In some cases, creditors or collectors may take legal steps to compel you to pay.
Can Conn’s sue me for non-payment?
Can Conn’s Appliances Sue Me? Yes, Conn’s Appliances can sue you. Conn’s Appliances can hire a lawyer to file a breach of contract lawsuit against you for the underlying debt, fees, and costs. If you’ve been sued by Conn’s Appliances, do not ignore the lawsuit; you may have defenses.
How can I get out of my Conn’s contract?
Should you ever decide you no longer need the coverage, you can cancel at any time. Simply fill out the form below and fax, email or mail it to us. It’s just one more way we’re working to make your entire Conn’s experience as easy, enjoyable and hassle-free as possible!
