Expert: Melissa Douros - 10/29/2008

Question
QUESTION: hi I have recently fell on some hard times, moved to Florida and have been living off my savings for the last two years. I have not been able to find a job in my field (construction management/architecture). In May I failed to make a pre-arranged payment with Amex they sent it to collections, I immediately contacted CCCS of FL and started a DMP they sent proposals (several to AMEX and collection agencies) basically I have been trying to work out payment/settlement plans with them for months. I cannot afford what they say is the minimal they will accept for a settlement and will not stop interest on the total if I agree to pay the whole thing. They told me that they are filing a judgement against me tomorrow. I cannot pay back what I do not have.  I am current on all my other debts, and would like to pay everything that I owe I am just not in a position to do that today. Do I have to either pay the whole thing or file for bankruptcy? Is there a middle ground they just don't seen to want to work with what I can afford. I am just not sure what to do or where to turn to for advice. Thanks for any advice you can give

ANSWER: Jennifer, bankruptcy is the absolute last thing you want to do.  Unfortunately, more and more people are having to do this these days.  If the Amex is the only thing you have, I would not file bankruptcy.  A judgment will be on your credit for 7 years, a bankruptcy for ten.

Amex is notorious for not working with consolidation companies.  While you continue to try and work out an arrangement with them, send in what you can afford a month.  Any good faith payment will be looked on favorably and they will cash your check!  Eventually they will see that you do plan on paying and accept an arrangement that you can mutually agree on.

Let me know if I can be of more help...

---------- FOLLOW-UP ----------

QUESTION: Would you tell me what exactly a judgement is? Do I have to appear in court? Are they suing me? I have looked on line and am not 100% sure.

Answer
Yes, a judgment means that they are suing you for the money.  But this is not as scary as it sounds.  When a company is awarded a judgment, it just means that that court says you owe them the money.  Now, you are not working, so they cannot garnish your wages.  If you are in possession of items that were charged on the card, they can get them back from you to pay down the debt.  If you go to court, they judgment can be awarded to Amex (and probably will), if you do not show up, they will issue Amex a default judgment, which just means the same thing.  They will still be owed the money.  

A judgment will show up on your credit report for 7 years, but once it is paid, it will show up as a paid judgment.