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I Hate American Express.

I Hate American Express.

“Dear Steve,

Currently paying off about $75,000 in credit card debt taken on during the economic slowdown last year when my consulting business tanked; current income of about $150,000. Not sure that debt relief is a viable option for me without severe negative credit rating consequences, so I’m paying down debt on most cards with a “hardship” agreement worked out with creditors – reduced or zero interest for a period of time with fixed monthly payments.

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All creditors are reporting accounts under these agreements as “being paid as agreed” except for American Express which lists the account as an R9 charge-off even though all payments have been made on time and the original balance of $8,700 has now been paid down to $1,200 with two more payments left. Is this legal? What steps can I take to ensure that this won’t continue to show “was charged off” once the balance hits zero? Will NEVER again carry an American Express card as long as I live – worst credit company I have ever encountered – even worse than Bank of America (2nd worst~).”

American Express isn’t the friendliest creditor, that’s for sure. But the real issue here is how long this payment plan has been going on and what the original agreement with American Express was before you entered a special repayment plan.

For example, generally a creditor must report as charged off if it is 180 days delinquent, as mandated by the Office of the Comptroller of the Currency (OCC). So if American Express was looking for a full payment but instead a payment plan was agreed to, after six months the account would have to be listed as charged off and that’s really out of the hands of American Express.

With other credit cards that allow for a minimum monthly payment the card would not have to be reflected as charged off until the less than agreed payments added up to six months of delinquency.

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This is why special repayment plans from creditors normally don’t last longer than six months.

If American Express did charge off the account, which it sounds like they did, the charge off will remain as a statement of fact after the account reaches $0. That statement will remain on your credit report for 7.5 years from the date first reported by American Express.

Damon Day - Pro Debt Coach

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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.
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