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AMEX Letter Like I Have Never Seen


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Hey Folks,

I have been away from this forum for a while. It helped me out in a HUGE way a few years back so I thought this would be a good place to ask this question.

Some years ago, I had an American Express card. When I had hard times back in 2009 or so, I was unable to pay it. I was fighting other battles at the time and they were the least of my problems. That said, I did owe them over $5000 and they never came after me for it. They wanted me to pay it but at the time, I was unable to. I was never sued and they never sent anyone to collect. They simply went silent. In fact, I had completely forgotten about it. That is, until today.

Before I explain the odd letter, I would note that things have gotten better in life. I only have my home mortgage and my car loan with no other debt. Everything is going well. In fact, I recently sold my house and applied for a mortgage to purchase my Dad's house and received great terms. 

Today, I received a letter from American Express. It has my account number and what I believe the balance was when we lost touch. There is a settlement offer for 55%. There is an expiration date.
Here is the odd part of the letter I have never seen before. The text goes like this:

"The law limits how long you can be sued on an old debt. Because of the age of your debt, we will not sue you for it. In addition, the law limits how long a debt can be reported to a consumer reporting agency. Because of the age of your debt, we cannot report it to a consumer reporting agency. Payment or non-payment of this debt will not affect your credit score".

It then goes on to talk about them understanding that I may be having difficulties paying the outstanding balance. They are offering 55% with a payment plan over 24 months. It gives me a phone number to call and a deadline in which I need to call by (within 20 days). 

They also claim " Settle for a portion of the outstanding balance and avoid further collection activity". 

My first question is, has anyone seen a letter like this before?

What other further collection activity could they take and could it come to life on my credit report again?

I am not opposed to paying it at this point but I am wondering if it will come alive on my credit report again if I do? Because of the mortgage I am getting when my house closes, I cant have anything on my credit report. 

I honestly don't know what to do at this point. 

Does anyone have any thoughts on how I should proceed?

 

Thanks in advance!

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I think in New York, you have to make a payment on the debt to renew the SOL. Simply stating that you owe the debt is not enough for them to do that. I would defer to others on that however.

That said. what you do depends on what you think is the best course of action:

1) Do nothing and if they poison your credit report, go after it vigorously. If AmEX confirms the entry on your report, I would threaten to sue them under the FCRA since you will have damages as the debt is too old to be reported on your report. True that they should not do it but they will anyways

2) Rather than take their settlement over 24 months, I would offer a lump sum settlement of say 30% of the debt on the grounds that 1) This settled the debt in full and 2) They do not report to the CRAs. Make sure to get any settlement in writing BEFORE you send them money however. That should keep them from doing anything. If they balk, let them know that the debt is SOL for both lawsuit and reporting and you know it.

Personally, with a house purchase on the line, I would go route 1 rather than 2 as the law is more straight forward on that. This debt is so old that they cannot report on it and they cannot sue on it. The only thing they can do is continue to contact you to try to get payment.

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7 hours ago, TakeItAll said:

"The law limits how long you can be sued on an old debt. Because of the age of your debt, we will not sue you for it. In addition, the law limits how long a debt can be reported to a consumer reporting agency. Because of the age of your debt, we cannot report it to a consumer reporting agency. Payment or non-payment of this debt will not affect your credit score".

Debt collectors usually provide that language.  Are you sure it's from AmEx?   If it's from AmEx, perhaps NY law requires they provide.  Otherwise, the letter is from a debt collector. 

In any case, according to the notice, the debt it past the SOL and they can't sue you or report to the CRAs.  

Considering they can't sue you or report it, why would you want to pay anything?

As has been stated, collection efforts would be letters and possibly calls but nothing else.  If the letter is from a debt collector, you can send a cease and desist.

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In 48 states, and NY is one of those 48 states, the debt persists after the SOL.  

Which means, they are permitted to try to collect the debt as long as they are clear they cannot sue you, or, if past the reporting date, they cannot report to the CRA.

Some people feel guilty about walking away from their debts.  They are hoping you will feel guilty, and pay them the money.

 

Note that they still won't reinstate your AmEx card if you do pay them 55%.  Ever.  For the rest of your life.

 

There are only two reasons to pay them anything:

1. You just feel SO guilty about walking away from a debt with the banksters you can't live with yourself, or

2.  You work out an agreement that if you pay $X to AmEx they will reinstate your card.  For most of us, the value of having an AmEx card isn't worth paying them off.  

 

Otherwise, round file this one.  

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2 hours ago, BackFromTheDebt said:

In 48 states, and NY is one of those 48 states, the debt persists after the SOL.  

Which means, they are permitted to try to collect the debt as long as they are clear they cannot sue you, or, if past the reporting date, they cannot report to the CRA.

Some people feel guilty about walking away from their debts.  They are hoping you will feel guilty, and pay them the money.

 

Note that they still won't reinstate your AmEx card if you do pay them 55%.  Ever.  For the rest of your life.

 

There are only two reasons to pay them anything:

1. You just feel SO guilty about walking away from a debt with the banksters you can't live with yourself, or

2.  You work out an agreement that if you pay $X to AmEx they will reinstate your card.  For most of us, the value of having an AmEx card isn't worth paying them off.  

 

Otherwise, round file this one.  

Even if you pay 100% of the balance they won’t reinstate your card. What’s in it for you? I’d tell them to get lost.

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Thanks for all the comments.

I decided years ago that I would never own another credit card (Though my bank suggested I get one just to raise my credit score). 

I would never have another AMEX anyway so that's not an issue for me. 

While I don't mind paying it, I wouldn't do that if I thought it would bring the debt out of SOL. It almost seems like it might. They are explaining that if I do nothing, they cannot sue me or report to the credit bureaus. However, there is no explanation of what will happen if I DO begin to pay it or pay it in one lump sum (or attempt to negotiate a lower settlement). 

I'm not losing any sleep over the fact that I didn't pay them. I don't think I will sleep better if I do. 
What I do have a problem with is them sending someone after me to collect - even if it is time-barred. In my previous "win", I had plenty of time on my hands. I had a full-time job and my only other responsibility was to win against the CA suing me. It took a lot of time and representing myself in a courtroom. None of which would have been possible without this Forum. Now, however, I have a full-time job and two new businesses and I simply can't fit in anything else. 

As stated in my OP, the mortgage process is already underway. It was approved but they will surely check my credit again before I go to closing. My credit score is in the low 700's because I have no other debt besides the house and the car. Little to no negative hits at the moment and I would like to keep it that way. 

Thanks again for the comments. 

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First off, if you do pay this, it will bring it out of SOL. That is why I said if you wanted to, do it with a lump sum payment rather than payments over time. They will report on your CRA that this account went into collections and is paid off. FICO now takes paid off account when calculating the score because the debt industry cried foul when people started to realize that paying off their debts made things worse rather than better. Also, if you do not get an agreement in writing or take the settlement and stop paying, by making a payment, you reset the SOL clock for lawsuit. Again, that is why if you do pay on this debt, do a lump sum rather than payments and get it in writing that the lump sum settles the debt.

As for sending someone after you, they will do so for the rest of your life (and might even contact your heirs to try to get them to pay). As another poster mentioned, only 2 states allow debts to die once the SOL has run out and New York is not one of them. The calls might get more threatening as time goes on because their only way to get you to cough up money is to try to scare you.

As for them hitting your report even though they are not supposed to, it could happen. That does not mean their doing it is legal but they might do it anyways because 1) they hope you are in a catch 22 situation where the quickest way out is to pay and 2) they know that most people will not sue them. There have been cases where BK debts have made it back to reports and sat there waiting for someone needing to get clean credit real fast. The BK courts put a stop to the more egregious violations but it has happened.

So we cannot tell you what will happen. The AMEX collector might follow the law and they might now. As for paying on the account, that should be your choice. I myself would probably not do so but it is an option.

 

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I have received letters like this from JDBs.  Not an OC like this is.

I don't see any advantage to you in paying them anything.  Paying them will reset the SOL.  Even if you settle in a lump sum, there is the risk that they may sell off the balance to a JDB, which could then sue you.

Plus, you will probably receive a 1099-C for the balance.  Which means this would be reportable, potentially taxable income.  Unless you can show you are insolvent (Form 982), and it sounds like you are not insolvent now.

If they can't sue you (the worst thing they can do, right?), then what can they do?  Letters and phone calls, which you can ignore.

I wouldn't pay them anything.

 

 

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