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What you are seeing is called "bird's nesting." There are two main reasons for "bird's nesting."
The first one is the thread not between the tension disks. That allows the thread to be pulled from the spool instead of pulling the thread tight from underneath. Always make sure to always put up your presser foot before you thread the tension disks. I also check the thread after I finish to make sure the top thread has good tension on it before sewing.
The second reason is the thread is not being pulled by the take up lever. Make sure you see it being pulled by the take up lever before you start sewing. If not, rethread it.
When zig zagging over a raw edge, the tension on the thread will pull in the fabric, especially in lightweight cottons or even lighter organza. Its not the best edging method for very light weight fabrics. You can try using a smaller zig zag, loosening off the top tension a little bit. Or if your machine has it, use the triple zig zag or serpentine stitch, where the needle goes through the fabric three times to make up each zig stitch, this stitch is better for edging most fabrics and is my preferred stitch.
If I'm understanding the problem right it sounds like you have no tension on the bobbin. Take it out and see if the thread has any resistance when you pull it out. If you hold it up by thel thread and let it dangle and it just drops to the floor the tension isn't right. Check and make sure it is threaded correctly and tighten the tension. Test it again and when you dangle it, it should drop a bit with resistance when you hold it by the thread.
Also check that the top tension isn't too tight, but in this case it is more likely that the bobbin is too loose. And check to see if the dogfeed (the teeth that comes through the plate opening under the needle) is up and moving the material through the presser foot. If the material isn't moving at all it will sort of stitch "in one place" which will give you a bunch of threads all knotted up underneath. If those underneath threads are loopy that is a sign the bobbin thread is too loose (tension too loose)
It very well could have a burr in on your bobbin case, If, it was me, I would take it to Sears sewing machine department and ask them what they think it could be. They sometimes have new bobbin cases right there for you to buy, depending how big your Sears is. It won't cost you anything, at least to find out from the saleman.
Does this only happen when you begin sewing????? Make sure your upper and lower threads are long enough for you to hold them.......lower your pressure foot and don't release the threads until you have sewn several stitches into the seam. If you don't hold the threads when starting a seam...both threads often get pulled down into the bobbin area and cause a big tangled mess. Hope this helps.
When I have run into similar problems with my older Singer, it's because there is a bit of thread caught somewhere in the bobbin mechanism that doesn't allow the shuttle to run freely. Take the bobbin assembly apart and use a bright light to see if you see any bits of thread in there.
I think you are threading the top of the machine incorrectly. Make sure that what I'm saying is correct, use two color threads to sew with- and you will see that it is in fact the top thread that is bunching.
This might be a tension problem. Could be the bobbin is not threaded in the case right. First, check the threading of the bobbin and then check the stitch.
Next, adjust the tension on the bobbin case. There is usually a small screw on the case that can be tightened or loosened. I think you may need to adjust it a bit or adjust the top tension knob, just a small bit at a time. It the top does not change the stitch, then go to the bobbin case and adjust the screw to tighten the stitch a little bit more.
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