BB Owes American Express $40,000, She Can’t Pay It, Bill Collectors Are Starting to Call

Posted by Steve Rhode
Ask me your question.

Click on the star rating below to rate this article.

(1 votes, average: 4.00 out of 5)

Loading ...

BB wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty. If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help.

“Dear Steve,

I’m in approximately $80,000 of credit card debt with an unfortunate and sudden drastic change in finances due to situations beyond my control.

I owe American Express $40,000 along with other credit card debt. I have never been late on my payments except this month.

American Express along with a few more creditors has already begun to call me. I have not as of yet returned the calls.

I’m pondering bankruptcy or perhaps some sort of credit counseling or debt consolidation plan? Do I just write each creditor explaining my situation?

At this point I only have approximately $500 dollars a month and just one of my American Express accounts requires a monthly payment of $516.

Please help, I’m desperately awaiting your advice.

What would you suggest I do? I inquired about bankruptcy and was advised I’d need to wait perhaps 3-6 months as bills are behind. Suggestion?????

BB”

Dear BB,

It is amazing how people are really as good to creditors as their last payment. Whatever has caused this sudden and drastic change was not expected or planned for but it has now left you in a very difficult situation.

American Express is a difficult company to deal with and their bill collectors have limited tools to use to really help you to get out of debt. The pressure they apply and approach to their debtors actually does more to drive people into bankruptcy as crazy as that sounds.

There really isn’t any reason to write to your creditors. If you have been late on a payment, they already know that. Besides a preemptive letter to your creditors seems to go nowhere and vanish into the ether.

You are much better off explaining your situation, nicely, to the collector on the phone when they call.

If your situation is temporary and you will be able to return to your previous financial standing in a couple of months then you’ve got some other options but from the way I interpret your question it sounds as if this is not a temporary reduction in income and it is more dire and long-term.

I am surprised that you were told to hold off on bankruptcy unless you were using your American Express cards up to recently. It would not be the best scenario for you to use credit cards you include in bankruptcy within 90 days of going bankrupt.

I would seek a second opinion from another bankruptcy lawyer in your area and ask for a free bankruptcy review.

In the meantime you should consider not sending any more payments to the credit card accounts you can’t afford to pay. This will damage your credit report and lower your credit score but there is no upside in draining any money that you may have currently on hand that may be needed to make necessary ends meet or to pay for bankruptcy when you file.

With credit card debts of $80,000, your monthly minimum payment on those accounts is about $1,600, and that $500 is not going to be enough to please all of the creditors. Any repayment plan at that level is almost certainly to fail.

If bankruptcy is really in your future then throwing good money after bad is not going to accomplish a thing. But that does not mean you can go out and party with that extra cash. Save it up to go bankrupt.

Big hug.

Steve

Source: BB Owes American Express $40,000, She Can’t Pay It, Bill Collectors Are Starting to Call

Sphere: Related Content

Do You Have a Get Out of Debt Question You Want to Ask?

I'm happy to answer any question you have about how to get out of debt, as honestly as possible by sharing with you my experience and truth that I learned from helping thousands of people to get out of debt. Don't be shy, if you need help, ask now, click here.

And if you want to follow the latest questions and answers, just subscribe to my site RSS feed or get the email newsletter for free.