Chloe

“Dear Steve,

My daughter opened an AMEX card for me since my credit is fair. She got me a card in my name off of her account to be used for emergencies For the first 8 months of the card I was able to pay the bill however in mid July I came upon financial hardship and wasn’t able to pay.

I was using the card for everyday use and not emergencies and my daughter wasn’t aware of it since I was the account manager on the card and my bank account was connected to the card and paying all of the bills.

My daughter used the card maybe once or twice.

To make a long story short I can’t pay the bill and it’s now over 120 days in arrears. This bill is $38,000 now with all the interest it’s accrued. AMEX will not deal with me at all. I’ve asked them for a payment plan to get this paid off however all they offered was a plan that I have to pay $2930 per month for 12 months and I can’t afford that! I asked them to allow me to pay $700 – $1000 per month with a balloon payment in August (when I expect to get a bonus from my job) but they wouldn’t do that either.

They said if we don’t pay the first payment by next Friday that it will be turned over to a collection agency.

I have ruined my daughters good credit. She’s only 25 and was going to buy a house in the next few months and now she won’t be able to. I’ve also asked AMEX to put the liability in my name and make me responsible for the bill since my daughter didn’t know anything about this but they won’t do that either.

Any suggestions?? I’ve looked into debt companies but I’m afraid they may be scams.

Help please!!

Chloe”

The Answer:

Dear Chloe,

The damage is now done and hopefully you’ve learned some very valuable lessons. No sense wasting a perfectly good failure, I always say.

Sadly, this is not the first time I’ve seen a situation like this, and I’m sure it won’t be the last either.

When you daughter agreed to let you be an authorized user of her account she gave you the opportunity to ruin or damage her credit. And for everyone that may have allowed someone to be an authorized user on a credit account, check the balance and/or check your credit report to see what the current status of the account is. You don’t need a surprise like Chloe’s daughter got.

Before you leap to anything like credit counseling or debt management, which your daughter would have to enroll in since this is her card, not yours, I’d suggest waiting and letting the card go to collections.

Once it gets to the collection company they may accept your offer to repay $1,000 a month. But even $1,000 isn’t going to clear this balance in less than four or five years. This might be a good account to consider doing a debt settlement on. If you work with a reputable debt settlement company there is a chance that you could get 30% knocked off the balance and get this resolved in just a couple of years. Try contacting this debt settlement company and see what they feel is possible.

For my regular readers you may notice that while I am sometimes critical of debt settlement companies, this is a good example when a debt settlement approach might be a good option. The only unfortunate situation here is that it is an AMEX account. Never an easy creditor.

Big Hug!

@GetOutOfDebtGuy

The Answer:

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• American Express Cancelled My Card With Them Because My Mom Defaulted on Hers After 32 Years. – Carl
• My Daughter Was an Authorized User and Ran Up My Debt. I Have Cash to Settle. – Sharon
• I’m Thinking of Bankruptcy Because of American Express. – Kendra
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Read the full article at GetOutOfDebt.org, click here: Chloe Ruins Credit of Daughter With American Express

Carl

“Dear Steve,

I earn 85K clear of tax per year, I have a total of 95K in unsecured credit card debt, I am single and cover the expenses of my mother with a disabilty and she lives with me.

My mother had an American Express charge card for 32 years, she made a few late payments recently so Amex cancelled her membership, a month later they cancelled my membership and when I asked why they said its because someone at your address had their membership cancelled so all members of the same address have been cancelled even though our accounts are seperate and not a sub account.

I owe Amex 16K credit card, 3k line of credit and 11K charge card balance, total 30K. My salary is not fixed, I am a travel agent and earn commisions only, travel sales are well down and my salary has fallen 30%. I went to see a financial counsellor who requested to Amex if I can pay them $600 per month until my salary goes back up and they said no, I then asked if I could pay 5K on the charge card as full and final payment and again no.

My normal minimum monthly payment on the credit card was $350 and the line of credit $65, now that these accounts are closed they want $900 on the credit card per month and $130 on the line of credit. They made a payment plan on the charge card of $4000 end of July, $3500 end of August and $3500 end of September and this is non negotiable, I told them I am currently bringing in $5k per month, my monthly expenses are, rent 2K, credit cards (not including Amex) 2K, food/electricty/telephone and transport $600. Amex has said its not their problem and if I do not come up with the money then I am going to be sued.

At this stage if my salary does not go down any further I can make all the monthly payments and in the next few months when sales get better I will be able to pay Amex more money quicker. To date I paid them $1600 in July and intend to pay $1200 in August and so on but they are still not satisfied and I am hounded with their letters, phone calls and demands to get money from friends/family, borrow or any other means.

I have zero assets and I have supplied Amex with a statement of position but nothing helps.

I am so worried that they will take me to court, increase my current amount owed with solicitor fees and possibly garnish my wages.

Do you have any advice on what I can do, if Amex gives me the time I can pay out the charge card in 8months and the credit card in 24months. I must stress that Amex refuses anything less then the payment plan they have made for me which for the Credit Card and Line of Credit is 300% more then the minimum I paid before the accounts closed.

Thank you

Carl”

The Answer:

Dear Carl,

That is the first time I’ve heard of that happening. I’m not all that surprised though. American Express plays hardball when it comes to collecting. Some would say they are being heartless bastards, while others would say they are just doing the best for their shareholders by trying to maximize profits with aggressive collections.

Your only legal leverage is bankruptcy. Under bankruptcy, the court would either discharge your debt or create an affordable repayment plan based on your income. The Chapter 13 repayment plan would be binding on American Express at 0% interest.

Even if you have said to yourself that you would never consider bankruptcy, I implore you to call a local bankruptcy attorney and schedule a free bankruptcy consultation to go in and talk about bankruptcy. Do this to educate yourself about your options. After the appointment you’ll be in a better position to determine if that is a reasonable solution for you.

The danger here is that AMEX will take some initial big payments from you. That will leave you in a position of not being able to get by, you will default, and they will then come after you with a vengeance for defaulting.

When it comes to making repayment promises, it is ALWAYS much better to under promise and over-deliver.

Entering a debt management plan might be an option for you but only if American Express will actually lower your payment for you to something you can afford. You can click here to check with a debt management company. They may not make any allowance since they have already closed the card on you. It’s worth investigating.

You also need to consider if bankruptcy is a better option for you since you have a duty and responsibility for taking care of your disabled mother. How is she served if you meet the demands of American Express? She’s not and it leaves her in a potentially medically and life disadvantaged position.

This is unfortunately another classic example of the fact that people want to repay their debt, if creditors would only let them in a reasonable and sustainable way.

The other thing this situation demonstrates is that cardholders are only as good as their last payment. A long past history with a card does not mean a thing.

And let’s not forget, that while canceling your card was harsh, it is their ball and they can decide at any time to take it and go home and that’s exactly what they did.

Big Hug!

@GetOutOfDebtGuy

Other Related Articles to Read

• I’m Thinking of Bankruptcy Because of American Express. – Kendra
• My Business Work is Dead and I Defaulted on My American Express Card. – John
• I Was Making Payments to American Express and They Are Now Threatening to Sue Me. – Gracie
• Second Annual Small Business Saturday Could Mean Deal For American Express Cardholders
• American Express Targets Whippersnappers With FourSquare Credit Deals
• CareOne Said They Could Not Help Me With My Amex Debt. – Chris
• NCO is Offering Me a Settlement On My Amex Card. Is It a Good Deal? – Wayne
• I Have Accounts With AMEX and B of A That Are About to go to Collections. – Edward
• I’m a Student and Can’t Pay My AMEX Bill. – Erin
• I Lost My Job And Then Found Out I Was Pregnant. – Amanda

Read the full article at GetOutOfDebt.org, click here: American Express Cancelled My Card With Them Because My Mom Defaulted on Hers After 32 Years. – Carl