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Cash-strapped shoppers resort to buying on old-fashioned layaway

Michelle and Scott Cherveny had Christmas toys in their shopping cart and a simple explanation Friday for why they stood in the layaway line at Kmart in Duluth.

Michelle and Scott Cherveny had Christmas toys in their shopping cart and a simple explanation Friday for why they stood in the layaway line at Kmart in Duluth.

" 'Cause we're broke," Michelle said.

The Chervenys are one of many families nationwide taking advantage of layaways, a resurgent payment plan that allows customers to buy goods without having to pay the full retail price up front. With the dire economic outlook, Kmart began an advertising campaign three weeks ago to increase awareness of the service for cash-strapped holiday shoppers.

Duluth's Kmart store manager John Waltenberg said layaways have increased 15 percent since the ads started running. The program allows customers to pay a down payment when they pick out the item, followed by no-interest bimonthly payments until the items are completely paid off. Then they can pick up their goods and take them home.

"We can't afford to pay all at once," Michelle said. "It has been a tough year."

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The Chervenys wanted this Christmas to be like previous ones, but Scott, a seasonal lawn care worker, hasn't been able to find a job this fall. That left the family of four with little money and limited gift options for their two sons, Isaiah, 10, and Andrew, 8.

The Chervenys went with layaway to get what their sons want without having to wait until their Christmas-list toys are no longer on the shelves.

"We wanted to get things before they aren't available any longer," Scott said of the action figures and the used guitars they also put on layaway at Music Go Round.

J.C. Penney, Target, Wal-Mart and ShopKo in Duluth, however, don't provide layaway.

"People like to buy something and take it home right away," said Ted Cuva, the J.C. Penney store manager for seven years. "I haven't heard calls for it from customers."

Other retailers currently offering layaway include Burlington Coat Factory, Marshalls and eLayaway.com.

Layaway programs rose to popularity during the Great Depression and became a common form of payment for consumers who couldn't afford the total amount of a purchase upfront. But once credit cards became widely available, layaway all but disappeared with the exception of a handful of retailers.

These days, layaway is making a comeback.

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"People are looking to buy the things they want with non-credit based terms," said Michael Bilello, senior vice president of business development at eLayaway.com. "The lend-and-spend boom is over."

The Los Angeles Times contributed to this report.

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