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How to Settle Your American Express Credit Card Account

In May 4, 2012
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[Note: This article originally appeared as a guest post on Steve Rhode’s blog at GetOutofDebt.org. Thanks to Steve for permission to repost here on The ZipDebt Blog.]

If you’re facing a legitimate financial hardship and can’t make the minimum payments on your American Express credit card one potential solution is to negotiate a lump-sum settlement for less the balance owed. If you’re unfamiliar with debt settlement, you’re probably wondering how someone who can’t make their monthly payments would have the funds needed for a settlement at, say, 50% of the total balance. But there is a huge difference between income and assets, and many consumers who can’t sustain regular monthly payments due to lack of income or other financial hardship are able to use some of their dwindling savings for the purpose of settlements. Other sources for funding settlements might include the sale of household items, collections, cash value life insurance policies, borrowing from family, or sale of property. These are one-time funding sources, in other words. Once the money received from a one-time source has been expended, there is no more to replace it. But such funds can be put to excellent use in retiring a major credit card debt, when otherwise the customer would just be facing an unsustainable situation (which in turn often leads to bankruptcy).

When it comes to settlement with American Express, there are some specific facts about this creditor that you should be aware of. Prior to the financial crisis of 2008, American Express was not a bank like most other major credit card issuers (such as Bank of America, JP Morgan Chase, Citibank, etc.). The company converted to a bank holding company structure in November 2008 in order to become eligible for Treasury Department assistance under the infamous “TARP” program. The reason this matters is because there are some important differences that need to be taken into account in terms of the “collection culture” at different types of creditors. For example, most of the major credit card banks eventually SELL their delinquent accounts to various debt purchasing companies, so when you are trying to settle an old charge-off account it’s very possible that you’ll be dealing with a debt purchaser or their collection agency. Yet it’s highly unlikely you will encounter this situation with respect to any type of American Express account. This creditor rarely sells its accounts, no matter how old. It’s simply a part of the collection culture that developed at American Express, which positioned itself over the years as being “different” than Visa or MasterCard.

Why is this relevant if you’re trying to reach a settlement with Amex? Many websites offering advice on settlement of credit card accounts recommend sending “debt validation” notices to collection agencies or creditors, in theory “putting them on notice” that you are aware of your consumer rights and demanding copies of their backup documentation. There are definitely situations where a debt validation letter is appropriate and effective. However, when you are trying to settle an American Express account, it would be a major tactical mistake. The reason is because they have the documentation. It’s trivially easy for an original creditor to produce a stack of monthly statements two inches thick and mail it to you. Voila. Debt validated, and account moved to an in-state legal firm for your troubles!

The first rule in settlement with American Express is therefore to avoid any sort of tactical “games” like debt validation, which are generally unnecessary anyway. I always recommend proactive telephone contact with creditors, and American Express is certainly no exception. Get on the phone a couple of times a month and let them know about your situation. Be aware that you’ll hear various kinds of options presented to you depending on how far behind you are on payments. For example, if you are two payments behind, the representative will generally not discuss settlement yet and will only speak in terms of different payment options. Listen carefully to these proposals and note them down. Sometimes these alternate programs can include low interest rates and lower monthly payments, and for some consumers this level of relief alone may provide sufficient breathing room to get a handle on their financial situation.

If you’re more than three payments late, the odds are good that you’ll be hearing from an outside collection agency. It’s quite common for American Express to assign their accounts to third-party collection agencies well before the point of charge-off at 180 days late, often as early as 90 days late. Don’t panic if this happens! Understand that the majority of settlements with American Express are negotiated through these third-party collection agencies.

Achieving a settlement with any creditor is a matter of balancing RISK versus SAVINGS. You’re in a financial crisis and want to obtain as deep a discount off your balance as possible, but you also have to be mindful of the legal risk that mounts whenever you are behind on payments with a creditor. One important tip for determining the risk factor is to assess WHERE the assigned collection agency is located. If they are not a law firm and they are in some other state than yours, then the situation is low risk compared to assignment to a law firm in your state. American Express is not a “bluff” creditor, so we do take any legal threats from them seriously once a file has escalated to placement with a collection attorney firm (licensed to operate in the client’s home state). In such situations, the risk is greater, so we accept a higher figure than we might otherwise. Where the risk is lower, we can hold out and try to do better on the settlement percentage.

Let’s say you are talking with a third-party agency in a different state and they have agreed to a 40% settlement. You are happy with the result and you can fund the settlement ok. The one unbreakable rule in debt settlement is to GET IT IN WRITING FIRST, before you pay! You must have a letter in-hand before you make payment on your settlement. There are NO exceptions to this rule. A faxed copy is fine, and in fact most settlement letters are just fax copies of the agreement. This isn’t a matter of “trust,” or “distrust.” It’s just simple common sense that any agreement modifying your contract with American Express (or any other creditor) must be in writing. If you have a debt collector balking at putting the settlement in writing, then just put your foot down and insist that you will only proceed on the basis of a written agreement letter. It doesn’t have to be long! It just has to cover the essentials – the account number, amount of settlement to be paid, any payment installments listed clearly with due-dates, and the transaction has to be defined or referred to as a “settlement,” or “settlement-in-full.” Simple enough!

With your letter in hand, then you can make your payment. Cashier’s check by Federal Express is one method, but you want to be sure that you’ve coordinated payment method with the agency. Most of them prefer check-by-phone or electronic check (same thing). This is also called an ACH transaction, and it means you provide them the bank routing number and account number off your checking account. If you have it in writing first, it’s ok to do this. If you are negotiating settlements with multiple creditors, it’s better to set up a special checking account for this purpose. That way you can react quickly in case anything goes amiss.

One more important point about settlements with American Express. Many consumers have both personal and corporate cards issued by this creditor. It’s common to carry a personal account and then receive one issued by your employer, to cover work-related travel expenses, per diem costs, and so on. The corporate cards are generally issued to the corporation itself, even though your name appears on the card, so generally it is not advisable to attempt settlement on this type of account, as it could have a direct effect on your employment status.

Take the high road and negotiate in good faith with your creditors. Don’t play games or make up stories about your situation. If you are in a financial crisis, that is enough, and you just need to be patient and persistent. Start out with an offer around 20-25% of what you owe, but state this in terms of a dollar amount. You are aiming for a financial outcome that you can live with, not a world-record low percentage. As the negotiation proceeds, resist your initial urge to jump your offer right away, and give it some time to see how things go first. You can always increase later. The first offer you receive from an agency will rarely be the best offer available, no matter how convincing the explanation that this is “the best we can do.”

Over time, and with a series of negotiation calls, it’s possible to reach a settlement agreement on your American Express card that you can handle. Don’t be greedy. Once you reach your goal, accept the settlement and take the deal off the table. If you’re like most clients, you’ll feel a tremendous sense of empowerment at achieving a successful settlement. It can be a huge game changer financially, as well emotionally.

If you’re drowning in debt and want some expert advice and coaching as you negotiate through your settlements, please request a free 20-minute phone consultation. We offer training and coaching programs for every budget, and our mission is to help you negotiate effectively and settle your debt accounts quickly and safely.

282 Comments

  1. Ill try to keep this short. I was in the car export business for almost a decade with my client. The car business has been rough and mu client suggested that he could could sell new iphones. The first 4 transactions were very smooth. I would use my amex business platinum card and purchase about 100k-150k and send them to him in Asia. The 5th time I was able to purchase almost 300k worth of iphones and shipped to Asia. My customer tells me customs has been holding onto the shipment and he is working on getting everything out. It has been almost 3 months, and so I owe Amex 300k for about 3 months now and received my first call from an Amex law firm. I am in California. My client and I have an outstanding relationship and he has trusted me with millions of dollars in the past. With the car business being obsolete and was the main source of my income, I have been dipping into my savings the last few years and there is not much leftI do not know when and if my client will be able to get the iphones out of customs and pay me back. As of right now, I have to assume that I could have gotten screwed by my client as well I have told amex this and they just tell me to keep them updated and will be in touch. I am not sure what I should do with Amex. Since its such a large sum, should I get a lawyer? Sorry if this is kind of irrelevant, but I thought the background to the story may make a difference. Should I get a lawyer? Try to get on a repayment plan? File BK?

    • Henry, I would definitely advise you to meet with an attorney to discuss the bankruptcy option. There is no question that Amex will litigate for such a large balance, because they already litigate on much smaller claims than yours. If you are not able to pay, a lawsuit is coming your way, probably within 60 days or less. So it would definitely be a wise move to line up legal counsel in advance, as the attorney could help draft a response to the lawsuit to buy more time, if you aren’t prepared to file BK or want to hold off to see if the cash can be freed up, etc.

  2. My business has failed due to a bad partner who wouldn’t sign personally with AMEX. The company owes $43,000 and is not yet dissolved but it has no assets or money. I signed personally 20 years ago. They have been calling me and trying to get some money but I no longer have a job and my only asset is my house. They say they won’t discuss debt-reduction. Can they put a lien on my house and, if so, is that only after they go after the company and receive a judgment? I sold the assets of the company and need that money for other creditors who may be willing to reduce my debt and for my own home mortgages. I have no income except social security. Any comments?

    • Joe, if you personally guaranteed the account, then yes, they can come after you personally. They don’t have to go after the company first. They can file suit against you, and if they obtain a judgment, then they could indeed lien the property.

    • Charles,
      Thanks for your reply. I may be able to play it back with in a year. I have other businesses that I am currently working on that will allow me to settle this debt within a year. Should I still seek bk? Also, Because all these transaction took place within 90 days, would BK remove them?
      thanks again.. much appreciated.

      • Henry, I am not a bankruptcy attorney, so cannot answer this question, sorry. Also, I did not say that you should seek bankruptcy, only that you should consult with legal counsel since it’s such a large balance and litigation is all but certain.

  3. My business incorporated, had a card.. Got caught in the recession. 21k in debt. Worked out payment plan of
    $ 870.00 per month for a year to get balance paid on amount not carried over time. American Express said I graduated. Then was billed $ 140.00 per month on the remaining over time balance being charged 0% interest. The card was canceled at the beginning of the original payment plan. I had more financial hardship and got behind on the monthly payments of $ 140.00 They have now turned the remaining $ 10,700 over to a law firm for collection. Until now nothing has shown up on my personal credit report only on the business report. The letter I received from the law firm is addressed to me individually not the company and states if I do not dispute the debt heir office will assume the validity of the debt. My concern is this is a means of moving this from a business debt showing up on that credit file to a personal debt. Given the advice I read on debt validation above I am not sure what to do. Also, I do have the ability to get caught up on the payment fairly rapidly but not to pay a large sum in settlement.

    • Fred, I’ve never once seen an Amex “business” card issued to a small business owner that had not been personally guaranteed. It’s common for them to report business accounts to the personal credit file after default. If your goal is to protect your personal credit score, then there’s really no choice but to work it out a payment arrangement with the law firm that will restore the account to current standing. Validation definitely will not help in this situation. That language appears in the letter only because it’s a required clause per the FDCPA. Amex would easily be able to verify this is your account, so that strategy is about the worse approach in this situation.

  4. Hello.

    I’m in the process of finalizing a payment plan (15k) with the collection agency/attorney’s office for AMEX so the attorney’s office can dismiss the lawsuit with the court (MD) prior to the first court day (May 2015). The concerns I have are as follows:

    1. The draft agreement I was sent is worded “Stipulation of Settlement” – although I’m not settling but instead playing the full amount owed via monthly payment plan. Should it be worded different as opposed to the settlement language?

    2. If I’m paying the attorney’s office directly (vs. AMEX), why would AMEX be providing me with a 1099C (as referenced on the agreement). Plus I’m paying the full amount and not settling.

    3. Will my payments be transferred to AMEX, reflecting payment on my debt?

    Any other information you would like to provide with regard to my situation is most welcomed.

    Thank you.

    • Alyssia, I would have to review the actual document to be certain, but it sounds like they are just using their standard template for settlement post-lawsuit filing, which is often called a Stipulation for Judgment, rather than Stipulation for Settlement. The 1099-C language is included because the form covers settlements. If there is no forgiven balance involved, there will be no 1099-C issued. Or, it could be they are waiving some fees and interest, in which case a 1099-C would have to be issued where $600 or more is forgiven. Yes, the payments will be transferred to Amex, but the law firm is responsible for monitoring the ongoing payments and forwarding to Amex.

      • Charles, thank you kindly for your prompt response! I will respectfully request that the agreement be changed to Stipulation of Judgment (as opposed to Settlement). Ok, understand re the 1099 factor. Not sure why I wouldn’t make my payments payable to AMEX (vs. the collection agency/attorney) if all payments will be transferred to AMEX? In the Agreement, it states to make the payments out to their company? I will also request a paid as agreed status with AMEX once I pay the balance in full. Is that far fetched to ask for that status once I pay it off?

        Thanks again!

        • Alyssia, you should order the $100 document review service if you’re not certain the document covers what you need it to. It might be titled differently depending on what state you are in, so I was not saying it definitely had to be titled Stipulation for Judgment. The title really doesn’t matter as long as the language has the necessary clauses. You seem unclear on why the payments go to the law firm. It’s because the lawsuit is active until you complete the payment series, and this is what Amex is paying them to do. When you finish paying the balance, that will not erase the fact that it was previously delinquent, but the balance will be reported as zero and the damage will fade into the past.

  5. Hi Charles,

    Thank you so much for this incredibly helpful information, reading your blogs and comments are so insightful. I have a one time 30 Day late payment on one of my tradelines from 2012, I was told that it’s possible to have it deleted from my credit report, can you point me in the direction of how I can do that ( without hiring someone to do so.) Also, I’m an authorized user on my friend’s card and it has a very high balance which is pulling my score down, I was advised I can also have this information off my credit report without being taken off as an authorized user, how do I do that? Please advise.

    Thanks in advance.

    Hopeful Amy

    • Amy, the only way to “remove” a 30-day late notation on your credit report would be to file disputes with the credit reporting bureaus. The entry may or may not come off, however, depending on whether the creditor verifies it to the bureaus. Regarding the account where you are authorized user, you can have yourself removed as AU and that will get the balance removed. However, I’m not aware of a way of having the tradeline deleted when you are in fact actually an AU for that card. Also, my experience has been that while cross-reported AU accounts do form part of the overall credit history, they don’t have a direct effect on FICO score. I’ve tried having people add themselves as AUs on other family member accounts, and the score did not budge one point up or down. So you may be making a false assumption here.

  6. Good Day,

    I have an outstanding balance of $13,500 with American Express. I stopped payments around July 2014 due to American Express being unable to help me out on lowering my interest rate for me to pay down the balance. I was told since im never late on a payment nothing they can do untill i start missing payments.It has been many months now im currently negotiating for a settlement and they told me their last offer through Nationwide Debt Collector is $5,866. And if i dont take that it will escalate to another level , when asked what that is they refused to tell me like its against the law and also that next offer will be more that this. What should i do ? I can only afford to pay out about 3k.

    Thank You

    • Mike, the reason the rep at Nationwide didn’t specify what “next level” means is because they are not a law firm and don’t want to violate FDCPA rules by making an outright threat of legal action. The reality is that Amex will usually send it to a law firm next and that firm will file a lawsuit against you. The offer on the table is already below 50%, which is a good outcome. I would normally advise a coaching client to accept this offer after some additional haggling efforts, while it is still with this agency and has not yet been reassigned to a law firm in your state. It’s just not going to happen at only $3,000, sorry — that’s 22% and they will sue rather than settle for that.

      • Thank You Charles

  7. I have about 20k in Amex. Lost job and moving back to Russia ( my home country). I don’t care about credit score and have no asets in the US. my daughters family are still in the US and I used to live with them. Will they get in trouble if I move back to Russia and don’t pay? I have income or anything now. Thanks

    • Elena, your daughter and her family would only have a potential problem if they were also listed on the Amex account as authorized users. The creditor will attempt to collect from any person who was included on the account. But otherwise, they have no way to go after someone just because they are a family member.

  8. Wow, this is the best advice on settling with a creditor I’ve ever received! Thank you, Charles! I’m working on a settlement with American Express and perused the web to find out what other people’s experience has been. I’m certainly glad I found this website. I’ll do as you’ve recommended and hopefully, everything goes well. Thanks again.

    • Liv, you’re welcome, and glad the information was helpful to you.

  9. I was served today with lawsuit papers from American Express. I am mortified to begin with. However, I am in a position to pay this off in two equal payments. What should I do, contact the law agency and see if they will accept or send the money to American Express. Please help, confused.

    • Jeannie, if you have been sued then you need to work out the arrangement with the law firm rather than American Express directly. As long as you resolve this before the due date for you to answer the lawsuit, then you can avoid getting a judgment against you. If you’re able to pay the whole amount then there should be no problem at all. If you want help reviewing the documentation, I do offer a document review service for only $100.

    • I am not an expert and have my own AMEX debt.

      Even though you are in a position to pay off the amount, I would call the lawyers and settle and try starting at 50%. Since I don’t have an income, I will start my negotiating at much much lower percentage.

      Blessings to both.

  10. Hi,

    How is SOL determined? By the state I live in or the state applied for credit. I recently move from CA to HI. My AMEX debt is now with Nationwide Credit.

    Thank you.

    • Mike, the SOL is normally based on your current state of residence. Nationwide isn’t a law firm, so if you have the resources I recommend you try to settle with them while they have the assignment, as the outcome will be better than settlement via an in-state law firm.

  11. Hi Charles,

    This is a great article, it was very helpful in understanding AMEX. About 3 years ago I had a balance of 24k on a blue card which AMEX closed because I lost my job and couldn’t make payments. They sent my account to a law agency in CA (state of residence) I made arrangements with the agency but they were never completed, the lawyers on the account kept getting changed and I had a few returned checks. It’s been 2 years since I’ve made a payment and no one has tried to contact me. This morning my account was $4000 short, I called the bank and they gave me the name of the law group I had an agreement with. What are my options? I’m willing to continue payments but I also want them to return the 4k.

    Thank you

    • Kevork,

      Glad the article was helpful to you. If you had a judgment that was never resolved, then it sounds like they placed a levy on liquid bank funds. This will keep happening until you work out a stipulated agreement where they agree not to further levy or garnish, provided you meet the new terms of repayment as agreed. Another option would be to attempt settlement on the remaining balance. I recommend you first review the situation with an attorney to see if there has been any sort of procedural violation. But to be candid with you, it’s very long odds you will see the $4k back.

  12. Hello. Great blog. Got a question about AMEX, though.
    I am 5 months past due on an AMEX card with a balance of $15k. I’m trying to submit a settlement offer, but Gatestone (the debt collector) insists on an initial payment before they even submit an offer to AMEX. Does that sound right?

    • Clueless, no, that is just the agency trying to convince you to pay something so they can earn their keep. :-)

      • Ugh… I really don’t like these people. Thanks for the reply. It really helped.

  13. Hi, my husband and I own a business that is incorporated. We had business gold cards for many years but when the economy went bad and our business was greatly affected we ended up with a high balance and couldn’t meet the minimum payments, but paid what we could. They started adding interest and large fees for not paying the minimum balance. We attempted to negotiate the debt with them but they wouldn’t reduce anything. What they did do was offer us the option of paying a set amount per month for 9 months interest free, but that still left us with a debt of about $25,000.00. They said they wouldn’t extend the offer longer than that. We met our payments but they did cancel our account, which we expected. After the 9 months passed we didn’t receive any more statements in the mail and then a rep called us after we missed one payment and said our minimum payment was about $230.00. Since I was late, I made 2 payments over the phone with the rep. Since then we still don’t receive statements in the mail and I have been making payments of $230 each month. When I log into the website, it tells me the account has been cancelled. They show the minimum payment due each month (which goes down a bit each month and is now at $223 for this month). The weird thing is they aren’t adding any interest or fees at all anymore. My question is – are they still expecting me to pay them every month? It seems strange that they aren’t adding interest and fees any more and the minimum payments are now so low.

    • Bonnie, the reason they are no longer adding interest and fees is because the account is beyond charge-off now. It’s been declared a bad debt on their books, no longer a performing account. Yes, they still expect you to pay off the remaining balance. I don’t know why the payment has been set so low, but my best guess is that they had you on a hardship plan where you were paying at or below 1% of the balance each month, and it’s still set for that after the charge-off.

  14. I had some financial problems and had to charge off my Amex card in 2008-09. The balance was assigned for collection to a law firm. I have been paying as per court order 35$ a week for the past few years. I tried to make a payment this week but the law firm told me that Amex had them close my file and they no longer can take payments for it. The gave me a number to call which was to Velda’s or Valdos LLC. Is it common for Amex to do this even though I had a court order to make payments to this law firm and have you ever heard of this collection agency or NCOS?

    • Michael, it’s not a common situation but it doesn’t sound like anything sinister. It may be that you paid back enough on the judgment that Amex changed the way they were handling the account, and shifted it to Veldos LLC so they don’t have to keep paying the law firm. I recommend you check with your local court to see if the judgment has been satisified or is still in force, then call Veldos to see what their story is.

  15. Hello, I am in Canada and am over 1 year behind on payments to AMEX they have offered me a 50% settlement on $5,000 debt. I would like more like 30% or $1500. They told me that the AMEX policy is to not settle for less than 50%. Do you know if this is true? And or if it might only be true for clients who are one year behind, if that might not change after 18 months etc.? I have negotiated all my other visa and mc down to under 15% after 18 months this is why I am having trouble settling for 50%. Thank you for any help you may have on this.

    • Jay, Amex is a totally different creditor from most. While there is no official policy statement anyone could point to in terms of settlement practices, after having observed this creditor for many years, I can tell you that while I’ve seen a number of settlements with them under 50%, such deals are rare and very hard to come by. The main concern with this creditor is that they do not sell their paper to purchasers, and they are aggressive in filing legal action to recover. If this is your last account and you can fund the deal, I’d get it handled and done with so it doesn’t came back at you down the road, in the form of a lawsuit.

  16. I owe just under $15,000 to AMEX; going on 7 months of no full payments (paid lower-than-due amounts early on, but AMEX still forwarded to collection agency at 3 months, so the small payments seem to be wasted effort). Due to financial hardship, I am unable to pay the high amount they request. I have repeatedly offered $200/mo, but they insist on over $400–I just cannot pay near that much. Once I got to not paying the 6th month, the collection agency stopped calling (maybe 3 weeks ago)–they said earlier that it would go back to AMEX. I haven’t heard from AMEX yet, I would like to call them, but I am at a loss as to what to say. I have no money to settle. I’ve entertained going through a debt management group–of which I’ve heard from various groups that I must go delinquent at least 2 months with ALL my creditors to qualify, else AMEX will not consider a debt-reduction plan or payoff. I am current with all other creditors because payments with them are low/manageable.
    Maybe two years ago, AMEX let me get on a payment plan with lower payments and lower interest for a year. When I inquired about getting the same this round, they said I could apply for the same program the following month (the 3rd month of non-payment), which I was going to do, but then they went ahead and sent it to the collection agency.
    The collection agency has argued more than once that I should not pay the other creditors so I can pay AMEX. I consistently say that that would be a waste of money and increased debt, incurring all those late fees. They push for that nevertheless. I refuse.
    My financial losses are personal, so I elect not to share here. I did share with AMEX and the collection agency. Neither have refuted the legitimacy of my income status and difficulty…just so you know.
    I do not own my home, I am paying off my car. I have nothing worth anything. What can they do to me? What can I do to get on a feasible payment plan with them? I would much rather tend to this debt, or at least make minimum payments, rather than quit.

    • Sandy, sorry to hear about your situation, but you’re describing a very common scenario with Amex. They really do not have any good long-term hardship programs to offer consumers, and they just mechanically route these files to their various agencies regardless of the person’s situation. You are correct that sub-minimum payments are a complete waste of funds, as paying below the minimums does not prevent the account from rolling forward another billing cycle. From what you are describing the account is probably past charge-off now, and it will most likely get re-assigned to a different agency than the one that had it before. All you can do is keep a dialogue going with the agency, until you work out an acceptable payment plan. As to what they can do to you, once a judgment is entered, they can garnish wages in most states, or levy bank accounts. It’s usually possible, however, to negotiate a payment arrangement once they assign to a local law firm. Crazy that it has to be this way, but that is how this creditor flies. Also, given that their agency essentially encouraged you to default with other competing creditors, you may want to consider filing a formal complaint with the Consumer Financial Protection Bureau. Add your voice to the many who are complaining about this creditor’s absurd collection policies.

      • Thank you, Charles, for your informative response. I will look into filing that complaint.

        Can you give me some input re: debt settlement programs? I talked to a couple of agencies. They say I have to stop paying all creditors, and they give me payment/payoff plans that will get me out of debt within 4 years tops. The options they offer include a more conservative route of essentially consolidating (they acquire lower percentage rates from each creditor), and is not as damaging to credit scores (I’m not too concerned about that right now); the other option is their negotiating a lower payoff, and credit rating is harshly affected. I apologize for not recalling the exact details of these options, but it IS tempting to go with one of these routes–it would mean lousy credit rating, but debts are resolved just shy of my retirement age. (I have nothing set aside or accruing for that event either.)

        • Sandy, anyone quoting a 4-year settlement program is pitching a scam, as far as I’m concerned. That absolutely will not work with Amex in particular. It’s a complete fairy tale to think you can make it through 48 months of delinquency without seeing one or more lawsuits. You need to spend more time reading my materials. Virtually everything on this site is about why you don’t want to go that route. Start by looking back through my blog series on the myths of DIY settlement, and start with the one about the myth of the 36 month settlement program!

          • Hi Charles! Good news! I took your advice and steered away from those debt settlement programs. I did attempt to connect with Amex, but there was a voice-recording saying my account had been forwarded to a different collection group–this time it was Nationwide Credit Inc. I believe I saw that name in your dialogues/articles, so felt comfortable with it. (Please note: Nationwide people were VERY nice to me–unlike the previous Gatestone group I mentioned in my earlier post.) After allowing me to state what I could handle with my budget, they were going to let me pay $500 this month, and then $200 every month for 6 months at 0% interest, and then check back with meabout what I could do to improve payments. When I agreed to pay $300 this month and $220/mo for the next 6 mos, I was connected to a manager to confirm our agreement, then the manager offered $8000 to pay it all off–encouraging me to pursue a consolidated loan at a credit union. I assured my credit union would not because in the past they rejected me just for the marks I acquired from Amex, but he encouraged me to try anyway. I ended up applying for a consolidated loan at a larger FCU, and they looked at ALL my debt, looked at my credit history/standing with all creditors, monthly payments, longevity at job and rental unit, and apparently saw I was worth the risk. They offered to take every debt I had–even back taxes. They even said I could keep my credit cards (I think best in a vault, though!). Yes, I do think it was a win situation for the credit union, but it seems to be a win for me. My monthly payments have decreased, the burden has already lifted, etc, etc. I sent a cashier’s check to Nationwide Credit AFTER they sent me a letter of proof of pending settlement upon receipt of the $8000. Now they have the check and they tell me to call them back in one month to acquire the final paperwork. They also told me repeatedly, so I wouldn’t be caught unaware, that Amex would file a 1099 form because of their loss of over $600. Being that Amex said Nationwide Credit had my account, that I got the letter stating the settlement, and that $8000 was a good offer for just under $150,000 owed (between the 40-60% I believe you suggested somewhere), it just seemed to be a smart move. Assuming that it is, I have YOU to thank for my not taking the plunge into the other direction, destroying my credit AND conscience. My loan, btw, will be paid off in 5 years, and I can refinance it in 1 to 1-1/2 years if my credit score improves. Honestly, I feel like God had His hand in this as well, since 1) the FCU loan was well above their common max amount they allow newcomers to their credit union; 2) Nationwide Credit seemed really wanting to help me; 3) your posts helped steer me in a better direction. I do feel I got blessed in all this. Thank you for your helpful advice. I REALLY appreciate it.

          • CRITICAL CORRECTION: Debt was just under $15,000, NOT $150,000. Now THAT would’ve been an amazing score if it was that big of a difference. LOL. Sorry ’bout that.

          • Sandy, thanks for reporting back with your results, and congratulations on working this out yourself. From what you have described, you found an effective solution and as long as you did get the Amex settlement in writing, then it should be fine. As to the 1099-C, don’t overlook the insolvency exemption in case that applies to you. See my November 2009 blog post for discussion, and I also offer a $29 Excel calculator for help with determining insolvency and completing Form 982.

  17. i had a gold card with amex that is now delinquent… received a letter from a lawyer in my state that i need to pay the delinquent balance which is about 25k.. however the notice was sent in my relatives name??? why is that when i signed up for the account with my name and my social? what can i do to correct this? and what is the responsibility if its an error on their part when initially taking the application?

    • Anocali, I have no idea why Amex would have the account in a relative’s name, unless that person co-signed for the account with you when it was opened originally. They certainly have to direct their efforts toward the person responsible for the account. I would need to know a lot more about your situation before I could advise you, since the approach would depend in part on your financial situation, whether your aim is to settle or restore the account instead, and so on. You should consult with a local attorney about the matter, so you have a solid legal opinion before doing anything else.

  18. Charles – thank you for all of the valuable info you have provided on this site. I was a very good customer of American Express for almost 35 years using my Gold Card. I had an accident and became behind in my payments for a period of 5 months. I kept in touch with them, continued to send small payments, but at the beginning of the 6th month they cancelled my card and sent it to a collection agency. That same month I paid the complete overdue balance in full. They also cancelled my Blue acct which I had never missed a monthly payment on. Now I only have a $3500 balance on my Gold which I pay minimum on every month. If I paid this $3500 balance off would it help my credit score? Do you think I would be able to get another card soon from another company if everything else on my credit report is positive?I travel for business and this is really putting me at a disadvantage.

    • Barbara, paying off the $3,500 balance would have a positive effect on your credit score, since it would further reduce your credit utilization ratio. However, without knowing where you score stands now, there’s no way to answer your question. You might still be in sufficiently good shape that you don’t need to immediately pay off that balance, and could still get a fresh unsecured line from a different creditor. I suggest you run your scores before you do anything else or pay off the balance. If your FICO is still in the high 600s you should be able to get unsecured credit from some other bank besides Amex.

  19. I received a settlement offer letter from AMEX in the mail. The header has the AMEX logo and says its from AMEX Travel Related Services, OA Research, El Paso TX. However in the letter it states for me to call Nationwide Credit, Inc. I only owe $1,407.83 and they are offering me a settlement of $844.70. In reading some of the posts in this forum, my amount seems minute. Nevertheless, I would like to make sure this is settled without causing any more damage to my pride and credit score. I don’t think I will ever be able to be an AMEX customer again after this. Is this settlement offer one I should take and will I be able to be an AMEX member in the future, say another 5-10 years?

    • Syleena, if you settle with this creditor, they hold a permanent internal record. If you apply for an account with them in the future, they will deny it unless that forgiven balance is repaid. I cannot advise you via a blog post on whether or not to accept this settlement. It depends on your overall financial circumstances, existing credit score, and so on. Sometimes it is best to settle and move on. For others it might make more sense to pay the full amount of the claim, etc.

      • I guess my concern is whether I’m paying an entity of AMEX or if this is a third-party collection offer. (There is the AMEX logo on the letter but references Nationwide Credit, Inc.) How would I go about making arrangements to pay the full amount? Since I assume I can no longer work directly with AMEX.

        • Syleena, Nationwide Credit is a collection agency retained by Amex to work this account. This is not a sale by Amex, so they are still your creditor. It’s just that they have outsourced to Nationwide, and won’t speak with you directly now. You will need to coordinate through the agency instead, that’s all. This is common, not a big deal.

    • settling these accounts will not improve your credit unless you live in NY where the charge offs and settlements get removed after 5 years from the date of first delinquency. I wouldn’t worry either about being never being able to get an AMEX card again. they tried that stupid argument with me. They like to think they are the best and only company, but Capitol One of great at helping people with bad credit. Other banks that offers cards are Citi, Chase, Bank of America, barclays, Discover, wells fargo, td bank, & USAA.

      • JR, in my view the purpose of settling a delinquent account is to put to bed any legal risk, rather than to improve credit. But I completely agree that there are plenty of fish in the sea when it comes to credit card banks!

      • Great info! Thanks.

      • Hello, I had a terrible divorce in 2010. Ex-husband beat me up, broke my legs, ribs, etc and due to the injuries became delinquent on all my credit cards. Ex tried to open more accounts in my name so I locked all my information at Experian, Transunion and the other major credit places. Now I can’t access any credit information because I don’t remember the passwords I created to block the accounts and now need to verify any of my credit charges. At the same time I was told I had probable lung cancer. While not working and thinking I might die soon (my three children were young) so I sold everything I could to care for them and pay medical bills. My divorce lagged on for four years, complicated by his felony charge. Long story short, the spots on my lungs were determined to be rheumatoid arthritis nodules, so luckily I am alive, but I lost everything. At the divorce, I was awarded the house but they had already foreclosed on it.I fought the foreclosure for several months but then I did something called “cash for keys” and for $2000, vacated the home. Unfortunately, there is a lien against me and my ex for that too. Additionally, I was given all $90,000 worth of debt. Due to my diagnosis of severe rheumatoid arthritis, I am unable to do any work. The government has discharged my $22,000 student loan, which is rarely done. So, I’m disabled, living on a small teacher retirement and haven’t paid on anything since 2010. I stay with a friend to minimize expenses but most of my money is used on medical bills. Most of the credit cards were in both mine and the ex’s name (I had excellent credit prior to this) but a few are in my name only. I was advised by an attorney to make an offer of 5 to ten cents on the dollar to each of the companies. So I have a lien from AX (2010) FIE card services (2011) and another from Vendors Resource Management for the home (2012) although I signed the home over to them in 2014. I’m at a total loss of what to do and am terrified of contacting the card companies but don’t know what else to do. I have absolutely no savings and can’t afford an attorney. Any advice is appreciated.

        • Cathey, I’m very sorry to hear about your difficult circumstances. It sounds like a tough situation for sure. I understand that you can’t afford to hire an attorney, but I do think you should look into whether there are any legal aid services in your community. You definitely need legal advice but I’m not an attorney. Many communities offer legal aid services for people who have low income or are disabled. It’s possible that you don’t need to do anything else at this point, not if the house is already gone and the liens you’re referring to were against that property. Disability income can’t be garnished for a civil debt collection matter, so there probably is not much your former creditors would be able to do at this point to recover from you. I’m not convinced that calling and offering settlements is the right thing in your case, not if you have no savings and nothing to offer with. See about legal aid services at low or no cost (pro bono work) before you do anything else.

  20. i stopped paying American Express in 2009 after some financial difficulties. Since then, they have sent at least 3 collection agencies after me. I have sent them all Cease & Desist letters ifnorming them of my rights and for them not to call me. NAtionwide Credit harrassmed me first calling me after I told them not to. . A company called First Source Advantage, acting on AMEX behalf called me 10/29/13 after I told me not to call me at work. That was the third time they called me at work. I also sent them a letter in 2013 telling them Not to call me anywhere.

    Last week, they called my Brother(who has his own separate AMEX account) looking for me. I took the number (8774430144) and spoke to AMEX and told them not to call my brother looking for me. Yesterday they called my brother again on his cell looking for me. I have in the last 4 years sent letters directly to American Express, First Source Advantage, and Nationwide Credit each informing them of my rights and if they needed to communicate with me, then they needed to do so by Mail. I filed a compalint to the CFPB earlier.

    This is very frustrating and am considering taking action and wanted to find out my options. I am a resident of NY and believe that I am past the SOL for them to sue and collect. I know there was a recent decision in NY that says that the SOL is from the state where the credit card company is based in and not from my home state. Knowing this, I am not concerned about being countersued. by American Express. Thank you!

    • JR, your best bet is to involve a consumer rights attorney to pursue FDCPA violations. Go to NACA.net and look for an attorney in your area. Many of them work on a contingency basis, meaning you’re not out of pocket to use their service. See if they confirm you have actionable violations to pursue.

  21. I have a balance of $44K on an AMEX I stopped paying in January bue to a decline in income. I called GC Services who was calling about the debt but they are saying they absolutely can not even submit a lump sum debt settlement offer to AMEX that is under $34K, and from their experience there isn’t the greatest chance it will be accepted. They also state that I need to make a monthly payment BEFORE an offer can even be submitted, and I will have to supply earnings statements from my business and other financial statements in the offer. Does this sound correct? It seems to be quite different than other stories I’ve read about people settling with AMEX.

    Also, I am going to try to contact AMEX directly since I was finally told by an online rep how to bypass their automated system that kept telling me that GC Services was handling the collection now and then cut me off. Do I have any chance of them working directly with me and cutting GC out of the mix?

    • Mike, no, once the file gets assigned to an agency, the creditor will not work with you directly. FYI, there is a ton of misinformation online about the settlement process, which can be very different from one creditor to the next, especially *this* creditor. So I strongly recommend that you stop trying to figure out what to do by reading free debt forums online, and get some professional help in dealing with this $44k lawsuit-waiting-to-happen.

  22. i have an AMEX card I have not paid since early 2010. They stopped reporting on it in 2012. I just learned that they just reported it again as KEy deratory which dropped my score 50 points. It seems like they are trying to re age the debt. How do I correct this? Thanks

    • JR, it may or may not be re-aging. KDs are normally reported for 7.5 years from the point of default. As to correcting it, that would entail either a settlement, which will stop further damage but not reverse the prior notation as a derogatory account, or negotiating with Amex on a payment arrangement that will bring the account back to current standing.

  23. Hi Charles, I settled an account last year with American Express and they still have not sent a 1099-c form. $3900 is remaining. What should I do? Also the credit bureaus are still reporting the remaining balance.

    • Autumn, call Amex and ask why they have not issued the 1099-C. It should have come by now if you finished paying the settlement during 2013. FYI, you are still supposed to include the canceled debt as income unless you are eligible for the insolvency exemption (see IRS Pub. 4681), whether or not you receive the 1099-C. Regarding the continued reporting to the bureaus, start with Amex and ask why they have not updated your credit file. You can also file disputes with the reporting bureaus. If all else fails, file a complaint with the Consumer Financial Protection Bureau, which has already fined Amex $85 million for this sort of nonsense.

  24. I have a charged off Amex account that I would like to offer a settlement. The balance is $11,000. I can only offer in the range 25%. Do you think this is reasonable? Do I contact Amex or a collection agency. How do find out the collection agency?

    • Betty, that would be a reasonable starting offer, but Amex is very unlikely to accept 25%. You can try, but 40-50% would be a more typical result with this difficult creditor. If an agency isn’t calling you, then start with Amex itself to see if the file is in-house. I’ve never seen them sell charge-off accounts to a purchaser, so it has to be either in-house or out on assignment.

  25. Hello, I have an AMEX Gold card. My account was reviewed last summer (had to provide tax and income info etc) and a credit limit was imposed. Shortly thereafter, I fell upon hard times. I was past due on my account and owed about $6000. I payed all of the past due portion over a series of several months in lump sums and finally paid the account in full last week. I did not have a payment plan with them during the time; I simply paid as much as I could, whenever I could. During this period when my account was past due, the account was cancelled, though it still appeared to be within AMEX and not sold to a third party. A rep indicated to me that once the past due portion was paid I could apply to reinstatement. What are my chances of this? What does this process involve? Should I do this now or wait a few months. The only negative reporting on my credit report is related to the delinquency of my AMEX account. I should also mention that I still have about $4500 that I owe on this account in pay over time charges only (I payed on this portion as well during the time that I was past due so that account is now current with no min due until the next billing cycle next month). I have other accounts all current and in good standing.

    • Meredith, Amex is one creditor who does grant credit again to former customers who are in good standing (i.e., no unpaid balances in default and no settlements where a partial balance was canceled). So your odds are pretty good they will reinstate. I can’t say for sure because it will depend on other factors on your credit report, etc. Just call Amex and ask whether your account now qualifies for reinstatement. There is no trick to it other than simply calling and asking them to evaluate you again for renewed credit. Just be careful you don’t rely too much on credit in the future, so you don’t get behind again.

  26. I have an old Amex that I defaulted on due the financial crisis back in 2008. I never paid them and my credit report is stating that the account is scheduled to continue on my record until 10/14. Is it worth it to settle out with them or cross my fingers that it will indeed fall off in October of this year? Your thoughts?

    • Michelle, let’s make sure you are clear on the difference between legal liability for a debt and the period of time in which it appears on your credit report. The 10/14 drop-off only pertains to the delinquency being reported to your credit file, but has nothing to do with the liability itself. Depending on what state you live in, you may or may not be past the Statute of Limitations period for legal action. If you are past the SOL, and you’re not currently being sued (and there is no prior judgment), then it probably makes more sense to just let it drop off the credit report. Just be aware that you will never have credit again with Amex — they require the full balance to be repaid before they will issue a new card, even when the account is long past the SOL expiration.

      • Thank you so much for responding. How do I find out if I am past the SOL? I am in California. The outstanding debt was for $3700 and some change. I attempted to call and ask for a settlement but they would only offer $2900, no bargaining. I did not accept the offer and have not been in contact with them since. I do not have any judgments against me and they have not tried to collect or contact me since 2010. At this point I doubt they would allow me to obtain a new card so I could care less about that option, however this is the only derogatory account bringing my score down. Any additional information would be great, thank you!

        • Michelle, the SOL period for CA is four years. If you last paid anything toward this account in 2008, and there has been no litigation meanwhile, it’s past the SOL period as of 2012. If it’s going to drop off your report later this year, there isn’t really any compelling reason to settle it at this late date.

          • Great information, thank you very much! I was told by a banker that AMEX can change the dollar amount owed and reinstate the account on your credit history to keep it active and remain on your credit report for as long as they want. Is that true? Also, my more recent update on this debt is it went from being “schedule to remain on my report until October 2014″ to January 2015…how are they able to keep extending this?

          • Michelle, a balance change should not affect the drop-off date, which is normally 7.5 years from the point of default (assuming no payments were posted to the account during that period). So no, it’s not true as far as I know. File disputes if necessary with the three major reporting bureaus, and if you see a problem where they are extending the drop date by playing games, then file a complaint with the Consumer Financial Protection Bureau. Amex was already fined by them for credit reporting violations, and no one will be surprised to see this creditor receive multiple additional fines in the future.

  27. Great article! My credit limit for 2300 ballooned to 2900. I was a faithful customer since 1998 or so, always paid on time. My husband has been unemployed for 4 years and I’m the only one working. I stopped payments in Jan. 2012. Offered 65 bucks a month initially, they wouldnt accept that, so they served me in July through one of the law firms they work with. I’m in TX and have nothing that they can seize, I’m judgement proof. Concerned about them getting a judgement for my bank acct. Right now the most I could pay them is 30 bucks a month. I spoke with the agency they are working with this morning who informed me that they can’t discuss any payment plans until AFTER the trial. The intention of the call was to AVOID the trial! The agent told me to just send them the 30 bucks and they would apply it to my outstanding balance (no mention of sending me paperwork or making arrangements to document anything, just send us a check). Yeah right. The trial is in a few months and I cannot afford a lawyer. Any suggestions will be greatly appreciated.

    • Beth, I’m not an attorney so cannot advise you on a legal matter, sorry. If you don’t have funds to negotiate a settlement (still possible), then all you can really do is negotiate a long-term payment arrangement where they agree not to enforce the judgment (via levy on your bank account) as long as you don’t default the new agreement.

  28. Charles,
    My Amex Gold Card is now over 180 days late, total balance of $34,800. I am sending small payments when I have extra funds available. 10k of the balance is under the pay over time feature at 15.24%, which is still accruing monthly interest. The account has been referred to GC Services, and I have received a few calls requesting payment, but advise them that I send payments directly to Amex via online, as I still have access to online banking.

    I have the Blue card with Amex as well at 11k; this card is canceled and I am sending payments accordingly. I am paying interest on this card at 15.24%.

    My credit score is now in the 580’s.

    I am not exactly sure on what to do, A.) Continue paying both Amex cards as previously mentioned. B.) Stop paying the Gold card and save that payment to try and settle further down the road. C.) Stop paying both cards and save the funds for both payments, and try and settle both cards.

    • Mike, I can’t provide specific strategy recommendations via the blog, as I don’t know enough about your overall situation to properly advise you. If you’re considering the settlement approach, then please submit your request for the 20-minute consultation. Go to the main part of the site, and at the bottom you’ll see the link to submit the form. Thanks.

  29. Hello Charles, I had AMEX call me put of the blue with a repayment plan. I fell on hard times and owe 15K. My account is seriously delinquent. All my other accounts from other cards got sold and I assumed AMEX did the same thing. Is it really Amex or an Indian rip off artist? They offered $2,500 up front with 17 monthly payments of @ $800. At the end of payment they said they would give me an Optima card. Does this sound legitimate? I’m weary to give them my bank info. They didn’t offer to send paperwork or anything just “set up a payment plan” Thanks for the info.

    • Richard, I’ve never seen Amex sell their accounts, so this is probably a third-party agency working on their behalf. The offer is probably legitimate, but they don’t document the payment plans the way they do lump-sum settlements. Your options would be to accept a payment plan on the full balance, which is the only way you’d ever get credit again with Amex. Or you could do a lump-sum settlement instead, with no option of ever having credit again with them.

  30. Hi Charles,

    I have four AMEX accounts Green, Blue, Delta and Starwood with balances of $7000, $17000, $32000 and $500. Looks like I will be asking for hardship progrmas for the three big balanced cards. Does AMEX close out an account in good standing if others are in hardship or default? If I deafault, I want to settle for a lump sum, do I negotiate these accounts seperatly or as a whole. I am hoping for 60% settlement, is that realistic?
    thanks

    • John, if you enroll in hardship plans for 3 of the 4 accounts, the creditor will probably not close the 4th account outright. But most likely, they will lower the available credit close to the balance owed for that account. This would definitely be the case were you to default on any of the accounts. I’m not 100% sure if they will still limit credit if you’re in a hardship plan on the other three, but I believe that would also be the case. In terms of settlement, yes, 60% is realistic. But it will depend on how aggressive they get on the larger balances. As to negotiating separately or together, it will depend on whether they get assigned to the same or different agencies.

  31. Charles, thanks for your response. I do have a bk attorney who is a family friend. He suggested I call the attorney and see what they are offering to save me the cost of his firm charging me. I was just surprised that amex said my account was not eligible for settlement. So the question I have is do they tend to talk settlement once they have filed litigation? Does that get them to change what they are willing to accept? My bk attorney is really trying to get me to settle as much as possible in attempts to avoid a bk. Would it help if my attorney called?

    • Duderino, thanks for clarifying. What I can tell you is that it’s very common to hear “no settlement” when an account is first assigned, but as time goes by it’s usually possible to negotiate a settlement. The filing of the suit does not necessarily mean they will start talking settlement. Settlements after the suit has been filed do happen all the time. But it’s also important to consider that a lot of variables might come into play here — where you live, history of the account, type of credit product, which law firm has been assigned the file, and so on. I can’t go into more detail via blog discussion, but if you would like direct coaching you can order a one-off consultation for $150 (which includes 30 days of email follow-up support). Once I have a better feel for your situation, I could give you a clearer indication on the correct strategy and likely outcome.

  32. Charles,

    Thank you for all the information and experience you provide here on your blog.

    I am in a bit of an unusual situation. I applied for a Amex Business Gold card for a company I do not own any part of. At the time we were in talks of me becoming a partner, but those have since fallen through.

    As usual, when things were going well, everything was paid in full in a timely manner.

    Things are no longer going well, and balance is currently ~80k. While the due date has just passed, I do not believe the company will be able to pay moving forward.

    Any suggestions?

    • Howard, if you personally guaranteed this account, then Amex won’t care if you are a partner or not. They will try to recover the balance from you personally. I suggest you go line this company up with a loan for $80k (without you guaranteeing it this time), so they can pay off the Amex and you can close down the account to shut down any future risk to you. You might need to go to a hard money lender if the company isn’t performing well. You should also talk to an attorney about the situation so you have a clear understanding of your position should the company fail to make good.

  33. have a 30k balance that havent been paying on. Assigned to a law firm. Talked to them today. They said that amex says my account is not eligible for settlement. they offered repayment only. I told them i have a bk attorney. Wondering if they file suit if it will make them want to talk settlement. i could care less about my credit score.

    • Duderino, I’m not sure I understand your question. They will just assume you are bluffing about the BK unless you really do retain an attorney and have him/her call them for you.

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