I have about $26,000 in credit card debt and am about to start a plan with Money Management International. The question I have is about the American Express account, which is about $12,000. Over the last year, iIt has bounced from 2 collection agencies to a law firm, Mann-Bracken. I am never able to make the $300 monthly payments they specify for a temporary measure, so I wind up paying them every other month, and this law firm constantly threatens to sue me.
MMI reps all assure me that American Express does not turn down their proposals. MMI does not request approval ahead of time; they simply begin making payments to the credit card companies on the date I specify. However, I see elsewhere on this site that debt management agencies apparently must deal with the collector rather than with American Express. I’m confused about who MMI actually pays and who they work the deal out with, and whether the law firm will just kick it back and deny the proposal and take it to court, which is what I’ve been trying so hard to avoid. How likely is it that AmEx or Mann-Bracken will accept the MMI payments?
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Obviously I can’t speak about the MMI process and policy, but I will ask Kim there to publicly comment on this question.
What I can tell you is that American Express is not a very friendly creditor to deal with. Depending on the current AMEX policy they may bounce the payments out to the collection agency since they are not handling it anymore. But when I was running a credit counseling group my suggestion was always to contact the original creditor and get the account sucked back to them.
Original creditors seem to do a better job of posting payments and it just made things easier, especially when it came to making payments electronically to creditors. It is unlikely that AMEX will deny the repayment proposal but they may come back with a different offer. If you are unable to make those payments that keep American Express happy they could still take you to court even if you are in any debt management program.
All of that being said, no credit counseling group has any control over the actions of a creditor. A debt management plan (DMP) is not a legally binding agreement between the creditor, consumer, and counseling agency. Creditors can change the terms at any time.
On $26,000 worth of debt your payment would be about $520 a month. On the American Express debt you will wind up paying about $240 – $290 a month on that one alone.
I think the bigger question here is if you feel like you are running towards a credit counseling program to avoid what you perceive as legal action or that it truly is an affordably solution in which you can make monthly payments over the next five years.
If you are making a choice based on the fear of legal action, you owe it to yourself to also speak with a local bankruptcy attorney before you enroll with MMI. Bankruptcy can almost instantly put an end to any active or potential creditor collection activity, including from American Express or their designated collection companies. Armed with information from the bankruptcy attorney and MMI you can then make a fully informed decision that is best for you.
Do you agree that approach make logical sense?