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I’m Worried About Filing a Chapter 13 Bankruptcy Because of My American Express Card. – Lisa

Written by Consumer

Laid off during a kitchen remodel three years ago, had to finish with credit card payments, but finally the payments are too much for the budget

I wrote earlier about too much unsecured debt ($65, 000) because of a lay-off and how it is taking over our life. Your answer mentioned chapter 13 bankruptcy, but I am hesitant to go that route because I have an American Express card that is paid in full every month by my employer (by sending me a check) for my business expenses. the card is in my name and i need it for business and travel that pays all the bills. i can’t take a chance on having the account closed. sort of a catch -22. is this a real concern?

would calling the three credit card (usaa, 5/3, and capitol one) companies be a good alternative? with our escrow account being raised $600 a month recently for higher taxes, we just can’t keep sinking much money into the cards.

The choice of mortgage over credit cards seems obvious, but i still feel awful about the choice!

Please help with any advice or steering in the right direction (so I can finally sleep at night!!)
thank you.


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  • I feel for you, I’m in  similar situation.  I believe Steve has given you good advise with his comments.

    • You could open a secured card with any bank…usually with a limit of about $300 but you could add money to it as well and increase the spendible credit. Or you could just allocate a sum of money on a bank card for your expenses that your company would continue to pay and so forth… there’s a way…

  • Lisa,

    American Express is well known for reviewing the credit of current customers. It is quite likely that they would note that you had filed for Chapter 13 bankruptcy and quite likely they would take action to limit their exposure. They would likely also take action if you filed for Chapter 7 bankruptcy or if you enrolled in a debt management plan or if you defaulted on other accounts.

    In other words, it is going to be very difficult to maintain your relationship with American Express if you take any real action on your debt.

    Yes, you can call your creditors and ask for assistance. If your story sounds good enough, one or more may put you on a hardship plan and lower your interest and payments for up to a year. That may buy you some time but even that may trigger action from American Express.

    I think you will have to face the fact that debt has consequences. One very common one is the loss of credit. Thousands of people manage to work around this with the creative use of debit cards and prepaid “credit” cards. You can go to Wal Mart or almost any bank and buy a card with a Visa or MasterCard logo that can be used (once registered) for on line purchases and travel. This will change your money management habits but it should be a good change.

    Decide the best course of action for eliminating your debt and then prepare for life after credit. It can be done.

    Good Luck!

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