I had been an AMEX customer for years who always met my monthly obligations. My husband lost his job 2 years ago and because of the economy, has not been able to find another. His income was the primary income for our family. He started his own company at the end of 2007 and it is doing well, but not to the level we can afford to pay off AMEX.
We signed up with Freedom Debt in Feb. 08. They attempted to settle with AMEX but were refused. We then got a 1 time family loan so we left the Freedom Debt program and settled with our creditors. We Contacted AMEX and offered a settlement of $15,000(balance was $28,000). They again refused that offer. They hired a law firm that sent me a summons. I again attempted to settle with $15,000 and explained that if they didn’t settle on that, I would have to the funds to be used towards other debt(s). Again, refused.
Three months later I received a letter from this particular law firm with a Stipulation of Dismissal without Prejudice. About 2 months later I received another summons from a different law firm. Two months after that I received a proposal with 2 options from this firm. Pay $20,000 now or make monthly payments of $640.
I don’t have the cash and I am barely able to make my mortgage payments! I just can’t commit to $640 a month. I don’t know what to do. Would a judge look at AMEX and ask why didn’t they settle with the $15,000 when it was available to them? What are my options?
Honestly, there is probably nothing you can do here, except bankruptcy to kill the debt.
Yours is a classic case of one of the reasons why debt settlements don’t always work, even with lump-sum settlements. You can’t use debt settlements to get out from behind the mess unless all the creditors agree to it. All it takes is one rouge lender to not accept the money to scuttle the whole plan.
American Express is under no obligation to accept less than the full amount due. While it certainly seems to make good sense to accept cash in hand now rather than pursuing you for more, logic and creditors often do not coexist.
If you appear before a judge, it is likely that he will rule in favor of American Express. The judge will look at the situation as a matter of law, and will use the terms of your agreement with American Express to determine how to rule. Now, it is possible that the judge will kick them out and tell them to work out a payment plan with you but that does not happen that often.
Whatever you do, don’t ever agree to a monthly repayment amount that you can’t afford to make each and every month until the debt is paid off. If you miss a payment then the creditor will often come back after you harder and pissed off. They will use your failure to make the payment as evidence why you can’t be trusted.
So your realistic options are to stand your ground and tell AMEX what you can afford to pay and if they take you to court and win or will not agree to what you can afford, then meet with a local bankruptcy attorney.
The unfortunate part here is that I tried to do everything possible to resolve your debt without bankruptcy and yet, American Express managed to screw it up, yet again.