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American Express Won’t Let Us Continue Our Payment Plan We Established. – Kim

“Dear Steve,

We racked up $25,000 in debt to American Express on just one card and paid it down to $19,000 before being unable to make the $483 minimum payment each month. This was primarly due to daycare costs after having our first child. Daycare costs between $200 and $165 a week here is Gainesville, FL.

We were sent straight to an attorney at this point by American Express (not a collection agency) and agreed to pay about $200 and change, a month with no interest. It was a temporary agreement for a 12 months term in hopes are situation would change after that, but after 4 months we switched bank accounts and provided the new voided check to the attorney by email to switch the auto EFT info on our payments.

After the due date we noticed the money hadn’t come out and sent another email, still nothing. Then my husband started calling and the attorney said it was too late we had been kicked out of the 12 month program and to another attorney. This new attorney refused to take the $200 and change payment unless we could promise to increase to $483 after 3 months. We explained over and over that this wasn’t realistic. Nothing was going to change our circumstances that much since there were two other cards we couldn’t pay but they had smaller balances and we aren’t eligible for bankruptcy due to having parents on a couple accounts with us. After speaking with an employee assistance attorney that is free through our work they told us to just agree to the three month plan becuase in front of a judge at least we could say we gave AMEX money as long as they would take it.

We called AMEX back and the attorney wouldn’t sign us up for the program because my husband woulnd’t lie and say that we knew for sure we could pay $483 in three months.

While we were not home, but my brother was sleeping at our house a plan clothed man knocked on our door and asked if we were home. My brother in law said honestly we were not and the man handed my brother-in-law what looks to be a court summons but when you read it, it states that we have 20 days to respond in writing to the complaint.

There was no envelope and it clearly states we are in failure to pay and gives some of our debt information. It wasn’t in an envelope or given any effort to be covered. Isn’t this an invasion of privacy. Does this or the situation with billing during our 12 month program we were kicked out of go against the fair debt collection practices act? Do we have any recourse?

In Florida the head of household has some exemptions from garnishment so we are hoping to avoid my husband (the name on the card and I was just an authorized user) from being garnished. We have no disposable income and would lose o ur house if this happened.

Kim”

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The Answer

Dear Kim,

It seems we have a number of issues to deal with and a problematic statement by the EAP at work. If this case goes to court the court will typically decide the case as a matter of law. If the facts are your husband had a cardholder agreement to pay and didn’t make all those payments then American Express can avail itself of remedies under the agreement and/or law.

It does sound like you got served and you can confirm this by calling your local court house and asking them if there is a case filed against you.

American Express has a reputation of playing hardball and taking no prisoners.

So let’s see what we can do here. I have a couple of questions for you.

  1. Do you have any other debt besides the AMEX account? If so, what is it and who’s name is it in?
  2. How much is your house worth and/or do you have a Florida homestead exemption on it?
  3. What is the goal you want to achieve; payment plan, debt elimination, etc?
  4. When you say you are not eligible for bankruptcy because parents are on a couple of accounts are you concerned about repaying the debt or a notation on their credit report?
  5. Do you have access to something you can sell or another way to raise money to settle the AMEX debt?

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

American Express Wont Let Us Continue Our Payment Plan We Established.   Kim
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Serephim5

    1. We have several other credits card that total about $10,000 and those are primarily in my husband’s name with me as an authorized user on one. AMEX is in my husband’s name with me as an authorized user. One card has his mother’s cosigned on it I think. I have a couple cards that are in my name and total about $2,000.  I individually (prior to marriage) had a bankruptcy filed in September of 2005 and discharged in January of 2006. We each have 2 student loans that total together about $10,000.  Then two cars that we owe about $40,000 total on.  My car is in both our names and his has one loan that is in his and his father’s name. We are also paying about $100 a month for a 401K loan we took that paid off $11,000 in credit cards about two years ago.  We also have about $2,500 in medical bills we are making payments on.  We do have health insurance but this was deductibel and coinsurnace stuff.
    2.  We owe about $155,000 on our house, but it’s only worth about $140,000 or less at this point in the market and we do have a homestead exemption.
    3. Our goal would be debt elimination, but we aren’t in any way opposed to a payment plan we just don’t want to stop operating on the large deficit we do now.
    4. My husband spoke with the EAP (not me) and the way he explained it they just said continuing to pay AMEX anything, would help in the event of court proceedings and that with his father on his auto loan his father would have to file bankruptcy with us.  We definitely would not want his father’s record blemished at all, if that account could be somehow left out it would be fine.
    5.  We don’t have any assets other than our vehicle which we need and are kind of upside down on, so trading down I think would be unrealistic, and our house which we can’t sell in this market and don’t really want to lose.  My husband has maybe $6,000 in stocks, but they wouldn’t be worth that if we tried to sell.  AMEX didn’t offer less than $16,000 for settlement and we could never get anywhere near that.  We just settled 3 Bank of America cards that had $11,000 in charges for $3000 by borrowing money from a relative so that pretty much rules out any more borrowing too. 

     I was really also curious about #1 whether the garnishment exemption for head of household is true(my husband makes 30% more than me) and if he had to have claimed himself as such on our taxes to be eligible for the exemption. If my husband’s wages are garnished we will lose our house for sure #2 if the manner in which they dropped off the paperwork to my brother (my husband’s brother-in-law) staying at our house, is a violation of any debt collection laws or our rights of privacy because it was completely open for reading by the courier and my brother when it was known to the courier that we weren’t home or the one being given the document.  I read in the fair debt collection act that debt collectors can’t put info on postcards and such because it is a privacy issue.  Also I was reading about process serving rules and I thought the summons is supposed to be unidentifiable as a legal document and this was a totally lose document anyone could have read. My brother happens to be a sheriff’s officer so he would make a reliable witness.

    • http://GetOutOfDebt.org Steve Rhode

      I’m not certain if the process server violated any law. It appears they are a relative to you and the reality is that it you do owe the money and you are being sued.

      That EAP really gave you some bad information. Your father-in-law would not need to file bankruptcy. The loan may be reflected as in bankruptcy and he would wind up being solely responsible for the debt but there is nothing that prevents you from paying it.

      At the very least the smart decision at this point is for you to fill out this form and let us help you find a bankruptcy attorney in your area.

      I’d like for you to talk with a local bankruptcy attorney, not with the intention of filing, but to get the facts on which you can make a good decision. I think you’d agree that’s a wise approach so no more decisions are based on incorrect information.

      If you elect to not seek the protection of the court then you will need to take your chances with the court who most probably will rule in favor of American Express. If the creditor wanted to they could go for a wage garnishment from the accountholder or attach property or assets.

      As only an authorized user you are not liable for the debt.

      In my humble opinion what we need here is not a reactive approach to being served or judgment issues but a proactive approach, such as with bankruptcy, to allow you to get ahead of this.

      The most unfortunate part of this story is if you made a decision to borrow money and settle that other debt based on the apparent incorrect information the EAP gave you.

      Please keep me posted and if you feel I’ve been able to help, please provide some feedback at this link http://getoutofdebt.org/testimonials/

      Steve