Quick Answer: When unable to pay American Express minimums due to income loss, prioritize essential expenses like rent and utilities first, then contact AmEx to explain the situation. Missing payments will result in high interest rates, account closure, and credit bureau reporting, but these consequences may be unavoidable when cash flow is severely limited.
“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 ?”
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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.
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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.
Know Your Rights: If a debt collector is contacting you, you have legal protections. See the complete list of FDCPA violations collectors commit most often. Use the free Debt Validation Letter Generator to demand proof of the debt, or check this collector’s complaint history with the Scam-O-Meter.
Dealing With Debt? Before you pay a collector, understand all your debt relief options — including ones the collector won’t tell you about. If the debt feels unmanageable, take the 2-minute bankruptcy quiz to see if the math favors a fresh start. Federal Reserve research shows filers recover faster than those who don’t file.
