“Dear Steve,
I am self employed and have lost an important account. I now cannot pay the minimum on my American Express card, which is $2,000.00. If I pay them I can’t pay my other expenses.
Have you any ideas ?”
Dear ML,
Ouch! I know how much it hurts to lose a major account and have your income suddenly decapitated.
At times like these you need to prioritize your other debts. Things like rent, mortgage, utilities, necessary food, transportation expenses, etc. are priority debts and should be paid first.
The reality is that after those expenses and a little held aside for an emergency fund, then and only then can you even think of sending AMEX any cash.
If you think this s going to be a short-term problem and you will be able to replace the income soon then the most logical approach may be to call American Express, explain the situation and politely inform then you are not going to send them a payment this month.
Falling behind on your account has consequences. They may charge you a high rate of interest on the balance, close your account, and report you as a bad debt to the credit bureau. While all those things normally would want to be avoided, the reality right now is that you probably don’t have the cash to pay them.
Draw a hard line in the sand and in 60 days, if you are not able to replace the lost income, then you need to come back and let me know. We’ll have to work on a Plan B at that point.
Here are a few cardinal rules when it comes to dealing with your creditors.
- Don’t be an asshole.
- Tell the truth.
- Keep your creditors informed.
- Remember this is not a reflection of your value, worth or self-esteem. It just is what it is.
So, follow my advice and then put this matter aside for the next two months and instead focus on replacement income. If you can land that then payment promises can be made and American Express can be appeased.
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.
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