Credit after discharge

[ben1381]

I was discharged Chapter 7 on August 18,2010. I just tried to apply for new credit with American Express. They told me because I had credit discharged in this bankruptcy they would NEVER do business with me again-life long ban but explicitly told me if I "voluntarily" repaid the amount discharged they would consider doing business with me again. Is it a violation of the bankruptcy code for any financial services to do this and if so what can I do about it?

[justbroke]

It is not a violation at all. No financial service business is compelled, by any law, to do business with a person that has caused them an economic loss. I am in the same boat as I discharged over $120K in AMEX debt. They are not my friends anymore. I can't even get a corporate card from them or even become an authorized user on any card. For me, paying back that amount is insurmountable so I live with the fact that I'm ostensibly banned for life.

I "could" voluntarily repay them and they "might" let me back (considering credit scores). There is absolutely nothing in the bankruptcy code preventing a discharged debtor from repaying any discharged debt.

[ben1381]

Even for them to point blank say to me -" If you pay the debt we will do business with you again" Isn't that coercion to pay the discharged debt? I don't know of any other company that is doing this besides American Express and if they never want to do business with me again so be it.. Also why should American express have the right to make that demand when other companies are not?

[justbroke]

Even for them to point blank say to me -" If you pay the debt we will do business with you again" Isn't that coercion to pay the discharged debt?

No. This is not demand for payment, and is not a violation of the discharge injunction. It is not coercion for them to say that voluntary payment of the debt would allow them (to consider) to do business with you again. You don't have to pay it and it doesn't change the fact that it was discharged. Coercion involves a threat; they didn't threaten to sue you if you don't pay. For example, threat of suit would be a violation of the permanent discharge injunction. More importantly, they did not initiate any contact with you or "demand" that you pay. The contact was initiated by you to inquire about obtaining a credit card from them.

There are thousands of discharged bankruptcy debtors that do end up paying back some discharged debt. Typically this is to get back into the good graces of a creditor. This repaid debt is typically providers of healthcare, credit unions, and in limited circumstances companies like American Express.

[skyblue69]

You don't need American Express. There are plenty of other credit card companies who will be happy to help you reestablish credit. I too filed bankruptcy & discharged over $6000 with American Express. They were by far the most aggressive in repeated calling & demanding payment when I started to miss payments prior to filing bankruptcy.

[justbroke]

skyblue69 has the best answer. No one "needs" American Express. There are plenty of other large creditors that provide similar products. Unless you were hoping to get a (Centurion) American Express Black Card.

[TXskyblue]

Depending on the amount, there are stories of people being let back into AMEX after long periods. At 120K, it is unlikely. At less than 10K, it is possible.

AMEX has had this policy for a long time. They didn't call you or send you a letter about this. You called them and asked.

I agree about AMEX being the most aggressive about calling when I first defaulted. One AMEX rep even asked me point blank if I was planning to file BK. He was not what I would describe as pleasant.

I believe it would be crazy to volunteer to repay discharged BK debt. You filed BK for a reason. If AMEX isn't interested, there are many other lenders who are. You don't need AMEX.

[ben1381]

I generally agree and I have credit elsewhere but I was surprised by their hard line. There was 17K in my BK belonging to Amex.

[itlm062]

Thanks for the heads up, We wrote off about 30k with AMEX, and guess we will not even try with them going forward.