AMEX/VISA debt quesiton for all....

[Skipper]

Has anyone been successful in settling an outstanding balance with American Express for less than the full amount?

I am currently 60 days late and have a balance of about $35k. I also have a Citi Visa with a $30k balance. My options are limited to a settlement or BK. I do not have the ability to pay the balances in full.

There is a possibility that I can come up with about 40-50% for settlement, I am just not sure if that amount would work.

I know I am going to take a credit hit, but after a job loss (unexpected 65% pay-cut, as I had to take a new job), housing crash here is the West and my IRA getting crushed in the stock market (only have about $20k left in it), it has been a perfect storm. On the bright side, I think I may get my mortgage modified, so the next step is my cc debt.

I would appreciate any and all advice, as I want to make an educated decision on how to deal with it.

Have a good weekend!

Skipper

[I_Suck]

We have an old AMEX cc debt for around $13K that has gone through 4 or 5 collection agencies in the last almost 2 years now. I am pretty sure AMEX still owns the debt so I plan on sending their settlement department a certified letter this week with a settlement offer of 20% of the balance. If they take it, great (everything in writing of course). If they don't take it, I guess they can keep moving it around to different collection agencies. It's been almost 2 years since default so I am not sure what their strategy is.

[AngelinaCatHub]

It is my opinion only, but you might attempt to bargain but 20K with what you owe won't work. It would be better to get that mortgage adjusted, take the 20K and put it towards the household perhaps in payments ahead (make it clear they are advanced payments and not put it on principal only. Use the money for exempted expenses only. AND make sure your lawyer is in agreement with this suggestion. Remember, only my opinion. 'Hub

[catleg]

I think it would be very messy. You might get Citi to go for 50-55%, then you'd get 1099'd, but I doubt Amex would budge so soon, and even so you'd get another 1099. Better to figure out a chapter 7 strategy. Settled isn't that much better than a BK, as long as you manage to put the unused cash into an exempt asset.

Bottom line, easy credit isn't coming back, better to have cash and hit the reset button on the debt.

[backtoschool]

I had two amex cards with a total of 23k of credit with them. (maxed out). When I went late for 90 days, they offered me a plan that if I paid if full they would give me an new optima card for half of my former credit limit. When I went late 120 days, they offered to settle for 60% owed.

But....

Amex keeps a black list. Unless you eventually pay them in full, you can never get another amex card, including a corporate card.

I ended up filing chapter 7 and not taking the offers, but they did make me the offers. 90 days is when they started bargaining with me in my experience.

[Skipper]

I don't think you are in a position at this time to negotiate a settlement. You own a house, have a job and money in an IRA. What makes you think that only being two payments down is going to make Amex or Citi want to write off half of what you owe them?

Also since you are working (and have not stated what other debts you have) may very well end up with a tax problem from being issued 1099's for the settlements. You could generate a tax liability problem for yourself.

Amex and Citi will do settlements when it is in THEIR interest. At the least you are going to have to be 180+ days delinquent, the accounts will most likely have to be charged off and they need to feel this is the only way they will see any money. The accounts generally will have to have been through a couple collection agencies and a law firm or two with no results before settlements are offered.

Amex does not hand out debt settlements lightly. With you having a job and a house they are more inclined to sue you and put a lien on the house and do a wage garnishment before they write off half of what you owe.

When you try a settlement early on you have to provide them with all your financial information for them to review and consider it. Once they see your working, own a house, have an IRA with $20K and other assets, I just don't see them wanting to cut a deal.

I have two Amex accounts, one is a business account and it has been in collections for over 20 months. The other is a Blue Card and it also has been in collections for 20 months, it has been to two collection agencies, and two law firms and the account is now back with Amex. Amex sent a letter and called me to talk about settlement of the account for 40% off (meaning I pay 60% of the balance). I don't think sixty cents on the dollar is a very good deal since Amex won't get anything anyways. But they won't go lower than this. Keep in mind this an account that well over 20 months past due, been to four collection agencies and Amex just now is wanting to cut me a deal. I have no job, no house and no assets and the best they are willing to do is 60%.

My point is if this is the best they want to offer me and I have nothing, I don't see them offering you anything. Amex is notoriously difficult to deal with in all areas. They want what is owed to them and rarely take less.

I also have several Citi accounts, same story, 20 months in collections and not one offer for a settlement. Now if you had BoA that is different they do settle and they settle for very reasonable amounts.

Not that I am suggesting you drain your IRA (since it is exempt), but why are you not able to continue your payments with your creditors if your only two payments down and are working. Without knowing your financial situation are you sure you even qualify for a CH7? Have you done the work sheets to see or are you a CH13 candidate?

With only two accounts, why would you not want to just get them back to being current and continue. You mention a "hit" to your credit, a settlement would not just be a hit to your credit it would and will destroy it. Right now at 60 days late you took a hit. Settled on your CR is like a BK on your CR and by the time you get to "settlements" your credit is trashed.

Here is the deal.

My monthly expenses (since the loss/change of jobs) are currently $500 per month more than my take-home income. This is before any food/living expenses and credit card payments (prior to being late, the minimum payments for the cc alone were about $1400/month). My home is upside down by about $100k (this includes a HELOC and first mortgage). I have no other net assets, with the exception of a small piece low/no value land (and also with the exception of the IRA, which, by the way, was over $100k a year ago... I was filling the gap with early withdrawals and paying penalties).

So in a nutshell, I have been insolvent for a while. I held it together with IRA money, as I thought a promotion would come. Thanks to the economy, it doesn't look to happen for a few more years, if at all. Now the IRA is about gone, I am done paying my unsecured creditors. Like I said before, my plan is (was?) to modify my mortgage (HAMP plan) to stay in the house (payments are still current) and then deal with my cc debt. I have family that would help with the $$ needed, if I could get Citi and AMEX to settle. Even if the credit hit was the same, not having to deal with a Trustee, and the ability to almost immediately begin to rebuild some credit, would almost be worth the $30-35k I was hoping to settle with.

So in closing, I meet the means test for Chapter 7, and I do not have any discretionary income as calculated for Chapter 13. I was hoping that it would be an impetus to settle if AMEX/CITI truly understood that they stand to get ZERO if I am forced to go through a Chapter 13 or Chapter 7.

Thanks again for your thoughts, as this is almost overwhelming.

I look forward to hearing any additional thoughts you may have!

Skipper

[Cheeseater]

Damn! I guess I might as well give up on that new Black Card.

[backtoschool]

Here is the deal.

My monthly expenses (since the loss/change of jobs) are currently $500 per month more than my take-home income. This is before any food/living expenses and credit card payments (prior to being late, the minimum payments for the cc alone were about $1400/month). My home is upside down by about $100k (this includes a HELOC and first mortgage). I have no other net assets, with the exception of a small piece low/no value land (and also with the exception of the IRA, which, by the way, was over $100k a year ago... I was filling the gap with early withdrawals and paying penalties).

So in a nutshell, I have been insolvent for a while. I held it together with IRA money, as I thought a promotion would come. Thanks to the economy, it doesn't look to happen for a few more years, if at all. Now the IRA is about gone, I am done paying my unsecured creditors. Like I said before, my plan is (was?) to modify my mortgage (HAMP plan) to stay in the house (payments are still current) and then deal with my cc debt. I have family that would help with the $$ needed, if I could get Citi and AMEX to settle. Even if the credit hit was the same, not having to deal with a Trustee, and the ability to almost immediately begin to rebuild some credit, would almost be worth the $30-35k I was hoping to settle with.

So in closing, I meet the means test for Chapter 7, and I do not have any discretionary income as calculated for Chapter 13. I was hoping that it would be an impetus to settle if AMEX/CITI truly understood that they stand to get ZERO if I am forced to go through a Chapter 13 or Chapter 7.

Thanks again for your thoughts, as this is almost overwhelming.

I look forward to hearing any additional thoughts you may have!

Skipper

I was a year past due on both my amex and my citi cards when I filed last month. Neither sued me, and both sent me numerous settlement letters up until the day I filed. As mentioned above, I had $23k past due with amex (not counting interest), and 30k past due with citi. By the time I filed, amex was offering me a 50% settlement (they started with 60%). Citi was offering me a 70% settlement, but it included all the interest that had accrued. My guess is that I could have settled for less with them.

When I had a high income, before I lost my job in Jan, my full intention was to settle and not file chap 13. (now I am unemployed and have filed chap 7). The reason I wanted to settle was that my chap 13 payments would have been over $3,000 a month according to the attorney that I had retained at the time. I didn't want to pay that for five years, and I didn't want a trustee overseeing every penny in my life for five years. Since I was going to be in a 100% plan anyway, I didn't see any benefit to chap 13 versus settling the debt.

I was a renter though and didn't have a mortgage. The benefit to you of chap 13 is the possibility of stripping HELOC.

Anyway, to make a rambling story short, I certainly understand your plan, since I was going to do the same thing before I got laid off.

[Skipper]

I was a year past due on both my amex and my citi cards when I filed last month. Neither sued me, and both sent me numerous settlement letters up until the day I filed. As mentioned above, I had $23k past due with amex (not counting interest), and 30k past due with citi. By the time I filed, amex was offering me a 50% settlement (they started with 60%). Citi was offering me a 70% settlement, but it included all the interest that had accrued. My guess is that I could have settled for less with them.

When I had a high income, before I lost my job in Jan, my full intention was to settle and not file chap 13. (now I am unemployed and have filed chap 7). The reason I wanted to settle was that my chap 13 payments would have been over $3,000 a month according to the attorney that I had retained at the time. I didn't want to pay that for five years, and I didn't want a trustee overseeing every penny in my life for five years. Since I was going to be in a 100% plan anyway, I didn't see any benefit to Chap 13 versus settling the debt.

I was a renter though and didn't have a mortgage. The benefit to you of chap 13 is the possibility of stripping HELOC.

Anyway, to make a rambling story short, I certainly understand your plan, since I was going to do the same thing before I got laid off.

Thanks... $3000/month? Wow...

If I do a Chapter 13, I think it will be the 36 month plan, although I am not sure how the math is done regarding the early withdrawals that I have made from my IRA over the past year. If you look strictly at my W-2 earnings, I am well under the means test for my state.

I will also be interested to see if, in Chapter 13, I would have to wait 36 months for a discharge if I have no disposable income... Do you know?

Btw, in 2008 my pay went from $140k to $40k.... But the bills don't stop...

Skipper

[backtoschool]

Thanks... $3000/month? Wow...

If I do a Chapter 13, I think it will be the 36 month plan, although I am not sure how the math is done regarding the early withdrawals that I have made from my IRA over the past year. If you look strictly at my W-2 earnings, I am well under the means test for my state.

I will also be interested to see if, in Chapter 13, I would have to wait 36 months for a discharge if I have no disposable income... Do you know?

Btw, in 2008 my pay went from $140k to $40k.... But the bills don't stop...

Skipper

I totally understand. I went from making over 170k a year (in nyc this is not as much as it sounds though...) to being on unemployment insurance for the last 8 months. It's a blessing in disguise for me though because it allows me to go back to school and study something I actually want to do versus something I was required to do to keep making enough money to pay my bills.

Under the median chapter 13 plans are usually 36 months my nyc lawyer told me last year, but your mileage may vary.

[Cheeseater]

My Amex account is about 120 days late and was handed off to Nationwide credit. The balance was $12980, I had answered Amex's calls but told them I was unable to make payments. I spoke with them about 3 times total they would start off demanding a payment of $1200 and work their way down to good faith payment of anything. Nationwide offered me a settlement of 20% payable in 3 installments of $1000, $800 and $800. I never once asked for a settlement and told the on there first call I wasn't able to make a payment the next words out of Manish's mouth were how about 20 cents on the dollar. My account was very old and had no new charges on it for over a year. Earlier in the year they offered me a $300 gift card if I paid the balance in full and closed the account.
Now I have a closed account and no gift card.

[catleg]

You can get a corp card while being on Amex blacklist.
However I'm curious how my upcoming filing will affect my current amex corporate and wifey's as well. Technically I'm just an AU on hers but we'll see how nasty they are. I decided losing the ability to get a $500 credit limit was no big deal.

[backtoschool]

You can get a corp card while being on Amex blacklist.
However I'm curious how my upcoming filing will affect my current amex corporate and wifey's as well. Technically I'm just an AU on hers but we'll see how nasty they are. I decided losing the ability to get a $500 credit limit was no big deal.

You can only get a corp amex card if you are on the blacklist, if the company fully guarantees the card, and many companies don't do that anymore.

[OhioFiler]

Here is the deal.

My monthly expenses (since the loss/change of jobs) are currently $500 per month more than my take-home income. This is before any food/living expenses and credit card payments (prior to being late, the minimum payments for the cc alone were about $1400/month). My home is upside down by about $100k (this includes a HELOC and first mortgage). I have no other net assets, with the exception of a small piece low/no value land (and also with the exception of the IRA, which, by the way, was over $100k a year ago... I was filling the gap with early withdrawals and paying penalties).

So in a nutshell, I have been insolvent for a while. I held it together with IRA money, as I thought a promotion would come. Thanks to the economy, it doesn't look to happen for a few more years, if at all. Now the IRA is about gone, I am done paying my unsecured creditors. Like I said before, my plan is (was?) to modify my mortgage (HAMP plan) to stay in the house (payments are still current) and then deal with my cc debt. I have family that would help with the $$ needed, if I could get Citi and AMEX to settle. Even if the credit hit was the same, not having to deal with a Trustee, and the ability to almost immediately begin to rebuild some credit, would almost be worth the $30-35k I was hoping to settle with.

So in closing, I meet the means test for Chapter 7, and I do not have any discretionary income as calculated for Chapter 13. I was hoping that it would be an impetus to settle if AMEX/CITI truly understood that they stand to get ZERO if I am forced to go through a Chapter 13 or Chapter 7.

Thanks again for your thoughts, as this is almost overwhelming.

I look forward to hearing any additional thoughts you may have!

Skipper

Big waste of money trying to settle. Your story reads like you are a great case for a Chapter 7 bankruptcy.

[Skipper]

So lets see, you been in the hole long enough you blew your IRA that was all exempt from creditors, your willing to borrow from family up to another $35K just to be able to get you credit back "immediately", your banking on a loan modification and you think that Citi and Amex the 'light' will go on and they will realize they might end up with "zero" unless they make a deal with you.

Well, you blew your IRA that was exempt trying to fix this or wait for things to change, your trying to get loan modification and honestly they are rare and rarely happen, your willing to get money to the tune of $35K from family to settle your debt.

Sorry all I see is denial on your part. Everything hinges on a house of cards. If you spend out the rest of your IRA you have no money that is exempt and it has been paid out to creditors and basically you just gave it away. Your about to attempt to do the same buy borrowing more money to settle. You don't know if your going to get a loan modification and those are always rare and no one ever knows if it will happen. More likely it will not occur (and that alone is a whole other topic).

You think that Citi or Amex really care if you pay them or not? They don't (at least not in the way your hoping they do). All I see is good money being thrown after bad and I think it is mostly due to your not want to be under the control of a trustee and you want your credit fixed right away. Well your credit is..what it is. A settlement looks and scores just like a BK so settle or BK your credit is still trashed to the same extent. I am a bit more concerned about your feeling like you need more credit or the need to "rebuild" your credit is driving your thought process more than anything else. I have the distinct impression your tying to buy your way out of this.

You don't have the ability to force your creditors to cooperate and so on that note alone what if one of them refuses to go along? Are you back to this point right now or will it be after you paid one of them off and then that money is gone and now your still looking at filing BK.

Having a job and a house as an asset I don't think puts you in any position to attempt settlements IMHO.

Anything short of BK is dealing and counting on the unknown. This the inherent problem with any debt settlement type of plan. I have not seen many (if anyone) who started/attempted debt settlement and a mortgage modification and came out the other end with a success.

You should spend sometime with three or four attorney and get a feel for what they think.

I just hate to see you pour more money into your creditors pockets to not ever see it again when it could be put into exempt items.

Plus we haven't even talked about the "dirty little secret" of debt settlement and the fact the amounts the original creditors forgives, gets sold to a JDB and now they own it and come after you for the rest of what you owe.

Well Good Luck.

Thanks for the tough love...

I have been in denial to some degree. For the past 25 years, I paid everything on time, saved $$, yada, yada...

I then, overnight, lost a job (company shut down) that I been at almost 20 years. I was hired at a new company, and promised a promotion within one year that would have allowed me to work out a payment plan with the cc companies. Well, the year has come and gone with no promotion (economy driven issue). I am left with an income high enough to cover my mortgage and utilities, but not enough to meet the requirements for a payment plan for the cc's. Again, I am fortunate that I have family willing to assist, if it were to make sense to try and settle the debt as apposed to bk.

My comment about new credit was simply in reference to the fact that I have a leased auto that ends in 12 months, and I am concerned about how to replace the car if I am in bk. I don't want or need a credit card, just transportation.

I do have a question regarding the "dirty little secret". Do you mean to say that if a settlement is reached, and agreed to that the account is "paid in full for less than owed" (or something like that), that the individual would still be responsible for the remaining balance?

Thanks for the eye-opening words.

Skipper