My Income is Dropping and I Want to Settle My American Express Card


Dear Steve,

I’m 67 years old, self-employed for 45 years. Working less now, scaling down to live on a declining income. I own a small IRA “nest egg”, an emergency fund rather than a source of income, and my Social Security is minimal.

Eventually, I will be applying for State and County aid. Until then, I visit the local food bank and enjoy occasional free meals, and activities, provided by the Lions Club, and other organizations participating in senior assistance programs. I trade work for a portion of my rent, and my real property, in brief, is a 2003 GMC truck, work tools, and old Americana collections I sell on eBay for pocket change.

I never kept books, and have little financial documentation. My situation is stressful, but not debilitating. I’m active, self-sufficient, and enterprising.

After defaulting on a 36K Chase Visa card in 2012, I now have good, but limited, credit. Chase issued another visa card, and I foolishly applied for an American Express Card in order to receive a promotional discount at Macy’s.

Both cards originally had a credit limit of 2K with high-interest rates. Without requesting it, Macy’s American Express raised my credit limit to 4K. The Chase Visa is unchanged at 2K. The Visa Card is useful and easy to manage, even maxed out at the 2K limit I can still pay off the interest, and my charges, with more than the minimum payment.

The Macy’s American Express Card has become a liability. I’ve kept up to date with minimum payments and stopped using the card several months ago, but the interest is more than I pay in. The debt is now over 4K and climbing with a minimum payment due this month which I cannot afford. I’d like to settle with American Express. My question will be how, and when, to do it.

I have the funds available to offer American Express 25% or approx one thousand dollars. I could possibly offer more, 50% would be a hardship. The account is currently up to date, but It will soon be overdue.

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I defaulted on a Chase Visa Card in 2012. It was an honest mistake as far as defaults go, and after a year and a half of being bounced from Chase’s in-house collection to an out of state collection agency, and back to Chase, and out to collection again, I learned quite a lot about the process, and would not like to go through it again.

Chase finally decided you can’t squeeze blood out of a turnip and wrote off the loss. I would like to know if I should tender an offer to American Express now, and not wait it out for an advantage? Should I start at 25%, and be prepared for a counteroffer, or go in higher with a firm offer?

My concern is I’ve earned a good credit score since 2012, and even though my credit will be in jeopardy again, as a second offender, I would not want to be blackballed from the industry, (because I handled this improperly).

I’ve already made the initial call to American Express. I was informed to make an offer of scheduled payments with the possibility of lower interest or to make an offer for settlement. They do not give advice. The type, and amount, of an offer, was up to me.



Dear Marc,

You actually have a multifaceted issue.

The primary concern is you are heading into a declining income phase of your life, by your own admission, so it’s very important to have already begun to save for retirement.

The immediacy of the debt situation is distracting you from the real crisis, the lack of retirement savings and minimal Social Security is my primary worry.

I understand how the current situation can distract you to the immediate problem at hand but the current struggle is a misdirection.

The other big issue is how to settle the AMEX card. That’s actually fairly straightforward. You can click here for more on how to do that.

See also  How to Settle American Express Credit Card Debt

We also need to turn our attention to the fact you were apparently having to use credit to make it through some tough times financially. Unless you have a plan on how to avoid those issues in the future, then settling or paying your debt now is going to leave you in the same situation in the near future when you may resort to the use of credit to get by again.

No matter what you do with American Express they tend not to forget that and may never give you a card again. However, you can’t be “blackballed” from the competitive credit industry because lenders are falling all over themselves to suck in new consumers.

I’d like to hear from you in the comments section below about how much you have in your “emergency fund” and if that is going to be the source of your settlement funds.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

6 thoughts on “My Income is Dropping and I Want to Settle My American Express Card”

  1. Hi Steve –

    I have a small residential irrigation business, and work as a handyman. Work varies seasonally, Averaged over a year I earn $1250 a month. This includes Social Security, trade for part of rent, and occasional IRA withdrawals.
    Besides the truck, tools, and collections, I have various electronics; computer, laptop, stereo, cell phone, etc., and misc furniture. Approximate total value, including truck, of 7 to 8 thousand dollars.
    Besides the IRAs, and Social Security, I have no other assets, like pensions, life insurance polices, real estate equity, savings accounts, etc..
    Thanks Marc

    • I would suggest contacting the folks over at HELPS and talking to them about protection from creditors. It might just be that you just can’t afford to settle the debt since the little assets you have left are what you will need to depend on to live. Letting your debt default and protecting yourself from collections is a strategy, just not my preferred one.

  2. Hi Steve – Thank you for getting back to me so quickly.

    I have two IRAs, A Roth, and a Traditional, with a combined value of $18,600. Contrary to recommended investment advice, the funds are not diversified, and are entirely invested in high risk stocks. The Amex payoff would come from selling a portion of one of my holdings. The stock I have in mind is currently above purchase price, but not near it’s potential. I do not “play” the market by any means. I buy low, and hold, (usually for several years), and sell when required.
    To sell early to settle the Amex account at $1000, or even $2000, will cause me grief, but balanced by getting out from under the Amex debt, it will be worth it. Since these stocks fluctuate daily / weekly, timing will be an important factor.
    My all or nothing investment strategy may be open for criticism, but i figured as a retirement fund it had no legs, It would be gone in no time. So I’ve made a calculated gamble. Living on the edge as it were…
    That said, I’m open to advice because a new problem recently came to light. The IRAs were set up contrary to an IRA that can be exempted when calculating financial eligibility for state and county aid in California. My IRAs are considered as cash, I believe because I retain control, and have unlimited access. I was told to liquidate the IRAs in order to be eligible for Medical.
    If i were eligible for Medical, Medicare payments would not be withdrawn from Social Security. My SS is $406 a month. After the Medicare payment, it’s $269.
    I’m looking into this situation during this year’s Medicare enrollment period, and will be seeking assistance from a local outreach program. Please feel free to comment, because I’ve put off making sense of all this for too long.
    Thanks Marc

    • Marc,

      I think it is clear that what you need is more information and more clarity to make some very important decisions. The issue of the IRA and calculating aid availability is not clear to me. I did find this in my research as an example, “IRAs, Keogh plans, 403b, 401k, SEP IRAs, Roth IRAs and basically any other work-related pension or retirement fund can be made exempt. If you don’t want Medi-Cal to count the account, you just need to start minimum payments of interest and principal (based on IRS tables) and the balance of the account will be considered to be unavailable. This is true even if you are under the age that you’d normally have to take distributions.” You are age eligible to begin small withdrawals from your IRA so if this will allow you to preserve your IRA then that would be a good thing to investigate.

      You can easily convert your IRA into a stock index fund. They typically have a good sustained rate of return but talk to your investment advisor at the IRA fund about your objectives versus the fund goal. It may be time to pull back from the high-risk edge just a bit.

      How much money are you bringing in each month from your current employment/business efforts? I’m trying to get a clear picture if your income may be protected from creditors. I don’t think you have indicated you have any other assets hanging out there like real property.


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