“Dear Steve,
Signed up almost 3 yrs ago with Legal Helpers Debt Resolution. Almost at the end of 3 yr contract. Started with 5 CC accounts. Now only 2 left. LHDR negotiated 3 (2 to go).
I still have 2 CC debts to settle. One is for 13K (they have not been agressive and have not taken any legal steps to sue. But Am Ex is 26K after aggressively getting a judgement against me.
Just wondering if you think AmEx will settle for a percentage of my debt? 20, 30, 50 percent or ? Will they negotiate, or are they very hard nosed about it?
Wish I had known I could have settled these debts without LHDR, but they have settled 3 of 5 so far. So I guess my question is..Will Am Ex negotiate? and for approx what percentage will they settle for?
No income other than a pension and no substantial assets. My house is under water on the mortgage. I will provide any other info if you want.
Dave”
Dear Dave,
Sadly LHDR or anybody else should never have signed you up for a debt settlement program based on the facts you gave me.
With a pension only income and an underwater house you should have filed bankruptcy three years ago. If you had you would have been out of debt for less and already rebuilt your credit.
I just hope you have not been paying these settlements by using retirement money. If you have you need to read The Saddest Avoidable Mistake People Make When Getting Out of Debt.
American Express is and always has been very difficult to deal with. But what will happen next is really based on what state you live in and if it is American Express that is trying to collect or a third party collection company. Do you even have 50% of the current balance on hand to settle with them?
If American Express does not want to settle and they are running up against the clock on the statute of limitations, they may just sue you and get the judgment. It would be preferable for them.
What does LHDR say when you asked them about this?
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Thank you for the article.. It was very informative.
Hi Steve, Much mahalos (thanks) for your fast response. To answer, I live in Hawaii…..my amex debt is being handled by Clay, Chapman, Iwamura, pulice, and Nervell..(not sure if they are actually amex or if amex “sold the debt off”…They already have sued and got a judgment…initially the debt was 20K now it is 26K……I am not using retirement savings to accumulate in a designated account for my debt but I am using my regular monthly pension. I was told initially by lhdr that I couldn’t file bankruptcy because my pension was too high. I have at this time 9K saved for settlement and putting about 900 a month. in. LHDR says they can’t predict what the settlement will be….they just say “time and patience”. Thanks again for the quick response. Dave.
Okay. If they already have the judgment you can either negotiate now or wait. With the judgment they can try to levy your account or garnish wages but pensions are exempt.
The judgment will have some interest rate associated with the amount and the balance will grow.
Most pensions are exempt in bankruptcy. Did you actually meet with a local bankruptcy attorney in Hawaii or just relied on what the salesperson told you?
A bankruptcy now would kill the judgment.
Aloha, Steve…I just relied on the salesperson and by spending a little time on line searching requirements for bankruptcy. I initially signed up with lhdr in aug 2010. At that time they had an excellent bbb rating. I have never spoken to an attorney from lhdr, just phone contact with staff (negotiators and office help). I think at this point it is just best for me to carry through with them, but it might take another year or two. What do you think? Thanks in advance. Dave.
Aloha Dave,
Let’s do the math. The judgment is currently at about 26K and if you could get to a settlement it would probably be around 60% or about $16,000, not including your last debt.
If you go the chapter 7 bankruptcy route your debt would be eliminated in 90 days for less than $3,000 and you can have your credit rebuilt fast.
Dave,
In my experience, American Express is willing to settle for less than the amount owed. However, since they already have a judgment, they really have no incentive to settle UNLESS you, through your attorney, let them know that their judgment is virtually uncollectible.
As Steve said, your pension is likely exempt from garnishment, and your house is upside down, and if you have no other assets or income, it’s not worth the expense of going after you since there is nothing for them to collect. But AmEx will not know that unless someone tells them.
It would have been better if you could have told them that and negotiated before they secured a judgment, because it can now just sit on the books waiting for you to acquire some asset they can come and seize (by the way, that includes that bank account where you are putting away settlement money!).
I think they will settle for far less than 60%. I’m aware of a case in Arizona where they settled a $400,000+ debt for less than $100,000, AND they “re-aged the debt” AND they issued the guy a NEW AmEx card!!! But he had an attorney negotiating for him, and it was before they got a judgment. The existence of the judgment will make it harder in your case.
Steve is right from a practical standpoint – it will cost you much less to just file bankruptcy and then the judgment goes away, along with the other debts and you never have to worry about it again. And if you have a second mortgage on your house, you may be able to eliminate or reduce it, depending on circumstances. You can focus on getting back on an even keel and rebuilding your credit.
But if for moral reasons, you’re not comfortable filing bankruptcy (some people are not), you need someone negotiating much more aggressively on your behalf. I’m not confident you’re getting the best deal you could.
Good luck!