I've had American Express accounts for many years. Never had a problem with them but my wife lost her job this year and we are soon not going to be able to make all of our payments. Right now, our credit score is good, even though we have about $35,000 in total credit card debt. What options can you suggest to us for consolidating our AmEx and other credit card debt?
Thank you for your question about your overall debt and your specific concerns about your American Express debt consolidation options. American Express is a major credit issuer, with over 100 million AmEx cards issued. American Express issues cards for personal and business use. In addition to issuing credit cards themselves, other banks issue cards with the AmEx brand. The same way that there can be a Bank of America Visa or Master Card, there is a Bank of America American Express card.
You can take different steps to work on your debt problems. Some steps are ones you should take on your own. At times, problems may be so severe that they require professional assistance to get the best results.
Contact your creditor in advance, before you miss any payments. This does not guarantee that they will waive a late fee, not hike your interest rate, or be flexible with you, but maintaining open communication is a smart choice. Find out if they offer a financial hardship program. That may give you some temporary relief. Ask for an interest rate reduction or permission to make a smaller than normal minimum payment.
If your credit is in good standing a balance transfer is another possible debt consolidation solution. Balance transfer rates can be as low as 0%, but they low interest period is only temporary. Make sure you understand the fees that come with the balance transfer and how long the low introductory rate lasts.
American Express does not offer unsecured personal loans. If you have strong credit, you may be able to find a debt consolidation loan from another provider, such as a bank, credit union, or a peer-to-peer lender.
If American Express or your other creditors are not willing to work with you, your best debt relief solution may be to work with a professional debt relief organization. Look into both credit counseling and debt settlement. Before you choose the right way to solve your debt problem, it can be very important to understand how your specific creditors work with their customers. That way, you can plan the most effective strategy for getting out of debt.
Bills.com's editorial staff has done extensive research to provide you with some specific facts about American Express and how it deals with accounts enrolled in debt relief programs.
If you enroll a American Express account in a credit counseling's debt management program, you should expect:
Consider debt settlement to resolve your debt, if you are in a serious financial hardship. Debt settlement is an aggressive form of debt relief that's designed to get you out of debt in 24-48 months. For a debt settlement program to succeed, you need to make a monthly program payment, which is usually significantly smaller than your required minimum monthly payments.
Bills.com reviewed hundreds of settlements reached by professional debt settlement negotiators for the client's American Express accounts. The average settlement negotiated was less than 52% of the balance that the clients enrolled in the settlement program for all accounts still in the hands of AmEx. Account sent to legal collections settled at a higher percentage.
You are free to negotiate directly with your creditors, if you feel you can do so successfully. However if you are not confident that you have the skills, nerve, and time to handle back and forth negotiations with debt collectors, consider hiring a reputable and experienced settlement company. Make sure that you only work with a debt settlement firm that charges no up-front fees. Bills.com recommends choosing a debt settlement firm that is a member of the AFCC (American Fair Credit Council) and has debt consultants that are accredited by the IAPDA (International Association of Professional Debt Arbitrators).
If you default on any of your American Express accounts, or with any of your other creditors, and you are unable to work out a solution with them, you will end up in collections. Not every creditor treats all their delinquent accounts. Even the same creditor may treat individual customers differently. However, there are some basic strategies and practices that American Express and other creditors use when collecting on delinquent accounts.
Here are some facts about how American Express handle collections accounts, based on Bills.com research: