I have a different machine, a Babylock Serenade, and had that problem at first. It turned out the thread cutter doesn't work well with all threads. Mine works well with Gutterman, Mettler, Aurifil and Essentials (threads from Connecting Threads). The thread unthreads with these threads: Coats & Clark, Star, Robison Anton. Of course, your machine may have other "preferences", but I suggest you play around with different brands of thread and see if it makes any difference.