I Have Accounts With AMEX and B of A That Are About to go to Collections. – Edward

Edward 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.

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“Dear Steve,

I am not a great storyteller so here is my situation- I have three accts with AMEX that are charged off and are about to go to collections total is about $8,000 I have credit acct with BoA that is charged off to the tune of $5,000, I don’t know what to do.

I lost my job and was unemployed for 5 months and now I am employed but can’t get back in their good graces. I really could only afford about $200/mo total in payments towards these without causing myself or my family problems. How can I try to get this done? What should I do? Doesn’t seem like enough to file for bankruptcy but I also want to avoid court…any thoughts? Do you need more info?

Edward”

The Answer:

 

Dear Edward,

I think the technical issues surrounding your situation answer the question for you. With $13,000 of debt your monthly payment in a credit counseling program will be $260 – $300 a month. That might simply be out of your reach.

Even if you did enroll in a credit counseling program you would need to make that new minimum payment each and every month for the next 60 months.

It might just be that your best course of action is to contact both a debt management company and a local bankruptcy attorney. Talk to both groups and then after educating yourself about what each has to offer you can make an informed decision that is best for you.

Big Hug!

I Have Accounts With AMEX and B of A That Are About to go to Collections. Edward charged off bofa bank of america amex american express ask the get out of debt expert
@GetOutOfDebtGuy

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  • http://www.chs-law.com/rss.xml Carl H. Starrett II

    It has been my experience that American Express simply won’t deal with credit counselors or people who negotiate debt management plans.

    $13,000 might not seem like a lot to file bankruptcy, but everything is relative. $13,000 to someone making $26,000 per year is far greater of a burden than to someone making $100,000 per year.

    Right now, you have a $13,000 whole. If you successfully complete a DMP, all you’ve have to show is a $13,000 whole that has been filled. If you file for Chapter 7 and manage to set aside the money that would have gone into the DMP, you’ll be a lot better off.

    Nonetheless, explore your options. Bankruptcy isn’t for everybody, but it is almost always better than a DMP.
    .-= Carl H. Starrett II´s last blog ..California’s 90-Day Foreclosure Moratorium Really Isn’t =-.

    • http://GetOutOfDebt.org Steve Rhode

      Edward,

      Carl brought up an excellent point I forgot to touch on. Carl is right, it is absolutely not the number that makes bankruptcy relevant. It is how the debt you have impacts your life that is critical. I’ve had people in front of me with $300,000 of credit card debt, not worried about it at all. I’ve had people with $3,000 of debt who are practically suicidal and sobbing.

      Steve

  • ryanortega

    Edward,

    One thing Steve left out was that credit counseling only works for accounts prior to charge off. If the original creditor has already charged off the debt it is too late to continue making payments via a debt management program or credit counseling program. Now Depending on the state you live in a debt settlement program sounds like the best option for you. If you could afford about 300-350/mo you could have these debts taken care of in about 2years or 24 months- Some settlement programs may allow you to enroll for 3 years and bring your monthly savings payment down below 300/mo. You should speak with a certified debt specialist before heading down the bankruptcy road. Also keep in mind you’ll need to get some tax advice for the charged off debt, the creditors will issue a 1099c, for the cancelation of debt, which may be consider as taxable income, unless you can prove insolvency.

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