American Express Membership Rewards - old amex cards were in ch11 bankruptcy... worth paying them off to start a new?

a friend of mine filed back in 1996 and it discharged and 10+ years later, everything finally dissapeared from his credit files. Tough times called for measures he still regrets in so many ways even though the laws at the time allowed for this sort of thing for people.

BUT to this day, within the walls of AMEX, he cannot really apply for any new AMEX cards and get approved because they show he had about $8k worth of debt. AMEX cannot ask for it, nor do they legally need it now, but they did take the loss. (A loss, they claim, did not end up as just some write off) The person's credit reports no longer show any of this on file--it only lives within AMEX now. They are not asking for interest.

He heard from them that if this is paid off, he could then apply for new accounts and get considered just like the next guy. He wanted to get the new SPG card anyway. Now, they told him there would still be a blip within their system showing his old cards were once was in bankruptcy but now that everything would be totally paid off, the AMEX internal records would update, and nothing from it would be considered based on that old record. He could then apply and it would go forward or not based on his current credit, etc, which he says is decent now.

Curious as to whether it's really worth doing or should he hold onto his money and just go thru life without the card, getting other MCs and Visa instead, as he has been doing since?

thanks!
:)MM

(PS it's not me, I have no debts and do have $$)

No credit card is worth an $8,000 initiation fee.

Assuming your friend does not have the same problem at Citi, he could use Diners Club Mastercard to earn Starpoints on a less favorable basis: $1250 = 750 which is $1 = 0.60 versus $1 = 1.00 with the SPG credit card. Your friend could easily calculate how many dollars he would have to spend for the 40% loss to equal $8,000, based on the value he attaches to Starpoints.

It depends on his personal situation and travel/spending patterns.
If he can afford it, and it was his debt in the first place, why not pay it?
I assume he has already paid off his other debt, so why not take care of this outstanding AMEX balance?
If he is going to be a heavy traveler/spender and needs to use AMEX's network of amenities/services (many of which you are able to get through other cards/services, however) then maybe this is the best option.
If he cannot afford it and just wants to have an AMEX just to be able to say he has one, then obviously I would not lose too much sleep about figuring out how to pay this.
As mia said, no card is worth $8,000 just to say you have it. If you are going to be genuinely using it for its extras/amenities/services/no pre set spending limit feature, then perhaps.

When you use the AMEX Oasis program they usually only let you get an Optima or Blue (no outside rewards program) at 1st. you credit limit is $1 to $2 K, sometimes up to 1/2 of the amount you paid off. After 1 year to 18 months you are "normal" again and can apply for any card you like. As with most things involving AMEX YMMV. Also, as a rule not as an absolute they report the opening date of the original card on your credit reports so they might get that benefit.

-Dave

I'm a bit dismayed that his motivation for paying off his debt is related to his desire to get a card with great benefits.

Legal or not, he left someone else holding the bag for $8,000. And now he wants to do business with them again. Yes, it's financially stupid to pay $8,000 in order to get a card. But, it's the honorable thing to do whether there's any benefit to him at all.

A good place to get answers to this particular question is creditboards.com

all very good answers thus far and thanks! I am turning him onto this thread (and to FT) as we speak, but he thinks I know stuff :D

Anyway, I do know that when one finds themselves in that horrid position to have to file Ch11, it is NOT something that comes with the same mindset that we 'normal' people deal with in our lives. I guess you could say it's like realizing you are dying of some terminal illness. Even if they somehow find some way to quell that, the prospect lingers for years on end and some of it never leaves you. There's a sort of finity with it all, so I have come to understand. This is at least how he put it to me. Now nothing is like DEATH but in terms of what you have for personal freedoms, you end up using the law to change all that for at least a decade.

I dont think he just wants the card to say he has it, but he does wish the burden was fully removed. He also said he had heard that some times if you work for a large corporation that would like its employees to have AMEX cards in their own names, CEO types can make a phone call or two and suddenly you have one even if you had credit problems. This may come without paying the $8gs back, but maybe AMEX and said company have some sort of relationship that simply parlays that amount in the name of doing large amounts of other business together. Who knows. Well he does not have that job or position, but he is curious about other ways to get in if possible. What's this about the optima or blue card? I was confused there.

And as for doing the honorable thing, well, yeah, that's part of it too... he does wish he could undo what happened and make it right this time... but once again, he did utilize the law, and so he did nothing wrong by filing. Some companies such as Bank of America, as he learned, WILL give you a new credit card even though they knew you had a ch11 filing 11 years ago. he was able to secure one of their baseball mastercards with the same rate as everyone else even as they knew his old records showed he owed them a good $10k back in the day. It was old business.

Amex is apparently different about this sort of thing. That's their right. He has no prob with citi, but does like SPG points. Sure it's not worth $8k to get a few thou SPG points and while he travels a lot and benefit from the card use, that kind of money may not really ever come back. Who knows. There are so many variables...

:)MM

I'm a bit dismayed that his motivation for paying off his debt is related to his desire to get a card with great benefits.

Legal or not, he left someone else holding the bag for $8,000. And now he wants to do business with them again. Yes, it's financially stupid to pay $8,000 in order to get a card. But, it's the honorable thing to do whether there's any benefit to him at all.

^^

What's this about the optima or blue card?

American Express offers two basic types of cards. The classic Green, Gold, Plantinum and Centurion are charge cards, payable in full every billing cycle. Citi's Diners Club Mastercard is also a charge card.

Optima was American Express' original credit card, meaning that it includes a revolving line of credit with only a small manadatory payment. Virtually all American Express cards other than the charge cards mentioned in the previous paragraphs are versions of Optima. They have airline affinity (Delta, Jetblue), hotel affinity (Hilton, Starwood), and various special interest versions.

If your friend simply wants "an" American Express card in his wallet it may be helpful to understand that Bank or America, Citi and several other banks now also issue American Express network cards. The charges are processed by American Express, rather than Mastercard or VISA, but the issuing bank determines the qualifications.

However, if his real interest is the Starwood points the only alternative is the one I already mentioned: Citi's Diners Club Mastercard.

OP's story does not, IMHO, add up. :confused: No doubt due to communication problems with the person this actually happened to. :)

Over the years, I know of many folks who have gone BK or just not paid their credit card bills, Amex or others. After the seven year period in which this can be reported they had no problem getting more cards, even from the lender who did not get paid, including Amex.

American Express offers two basic types of cards. The classic Green, Gold, Plantinum and Centurion are charge cards, payable in full every billing cycle. Citi's Diners Club Mastercard is also a charge card.

Optima was American Express' original credit card, meaning that it includes a revolving line of credit with only a small manadatory payment. Virtually all American Express cards other than the charge cards mentioned in the previous paragraphs are versions of Optima. They have airline affinity (Delta, Jetblue), hotel affinity (Hilton, Starwood), and various special interest versions.

If your friend simply wants "an" American Express card in his wallet it may be helpful to understand that Bank or America, Citi and several other banks now also issue American Express network cards. The charges are processed by American Express, rather than Mastercard or VISA, but the issuing bank determines the qualifications.

However, if his real interest is the Starwood points the only alternative is the one I already mentioned: Citi's Diners Club Mastercard.

thanks I will tell him./


OP's story does not, IMHO, add up. :confused: No doubt due to communication problems with the person this actually happened to. :)

Over the years, I know of many folks who have gone BK or just not paid their credit card bills, Amex or others. After the seven year period in which this can be reported they had no problem getting more cards, even from the lender who did not get paid, including Amex.

I will try and get more info from him but he said the first issue is that yes, in fact it is 10 years not 7. In fact some stuff stayed on his credit file for 11 years and he had to dispute for months to get it to go away. As for each bank, they can keep internal files that they do not report but that still live within their own walls, forever. They can therefore chose to lend to you or not based on that. I would think that's illegal or that the bankruptcy, by nature, would have covered that back when it discharged, but who knows what the law is on that one. Maybe they are trying to get him to send in money he already legally "paid off" by other means.

Sure if it were me, I would hope that if I had done that and then came into money later in life, I would be able to somehow repay the debts and hope theyd wipe my record clean, but I dont even think that happens if he does pay them the $8k. therefore, I don't see how there's any guarantee he'd ever get any new card. He said they obviously wont tell him if he could or not, because once he pays it off, they say he becomes like everyone else and can be denied or accepted for all the regular reasons we all find when applying for things. In that sense, it's actually a big risk to do this. If they are not asking for the money, why do it unless you need an AMEX for some reason? No God or country is going to totally wipe the slate clean on you, nor is anyone other than that one company (and any other that may have kept old files like that) going to ever judge you. Nor can they since it's no longer on your credit reports other than within said companies.

I guess what he is trying to find out is if this is something Amex can actually legally do... I mean, accept his $8k like that.

I will have to clarify that one.

I guess what he is trying to find out is if this is something Amex can actually legally do... I mean, accept his $8k like that.

This is a different question than "is it worthwhile?" I think the thread title is technically incorrect because if this was a personal bankruptcy I don't believe it would have been filed under Chapter 11. Do you happen to know if it was Chapter 7 or 13?

Oh yeah.
The private entity is honest and honourable by paying of his dept, solved by chapter 11, or is it plain stupid?
What do companies do or banks after going bankrupt?? They all pay therir depts, for sure, eh!?
(Where`s my money then?)

I would say forgett about that card and get something reasonable from C or Visa

Suze Orman made mention of this very thing the other day..she said that even though a BK has been discharged and "its not on your credit report after 10 years"..in reality..its Allways going to be on your credit report.Take that for what its worth..Also,we all know American Express Co. as the Elephant who NEVER forgets..so id say the only chance of Amex doing business with the debtor again is to repay the amount defaulted on and then maybe they would consider the debtor for an Optima card..I think thats the best offer Amex will make here..@:-)

...even though a BK has been discharged and "its not on your credit report after 10 years"..in reality..its Allwasy going to be on your credit report.

There are two separate concepts that have been comingled. Credit reporting means disclosing information to a third party such as a credit bureau or another lender. This is regulated. However, in this instance we are discussing information that American Express has retained internally based on direct experience with the customer. The interesting aspect is that there has been substantial consolidation of card issuers and Bank of America would now own MBNA's internal records, and Chase would own records generated by First USA and BankOne.

This is a different question than "is it worthwhile?" I think the thread title is technically incorrect because if this was a personal bankruptcy I don't believe it would have been filed under Chapter 11. Do you happen to know if it was Chapter 7 or 13?

couple of good questions there, and a curve ball thrown at that! I will have to ask.

Anyway, I think AMEX is entitled to do anything it wants but what I am curious about is this: If you pay the $8k back, where does it GO? I mean they asked for no interest so is that locked up funds or something? And if that's the case, didnt it at one time be disclosed as such, and so some entity to which they report their income and losses was like, "oh, ok we see someone filed against you. We will let that $8k go." But now, out of the blue, 12 years later, the bloke pays AMEX back that money! Do they need to declare it to said entity now? or do they just keep it and report it, where... as found cash?

Confuzzled.

Do they need to declare it to said entity now? or do they just keep it and report it, where... as found cash?

Confuzzled.

I'm sure AMEX has plenty of accountants who can figure it out, but it could probably be used to offset any losses.

Oh yeah.
The private entity is honest and honourable by paying of his dept, solved by chapter 11, or is it plain stupid?
What do companies do or banks after going bankrupt?? They all pay therir depts, for sure, eh!?
(Where`s my money then?)

I would say forgett about that card and get something reasonable from C or Visa

I entirely agree with this. If American Express (or, more pertinently e.g. Northern Rock!) went bust, would the directors say that hiding behind "Limited Liability" is dishonourable and all sell their houses to pay the shareholders. Would they hell!

Credit companies operate within a legal framework that gives them protection, and gives the consumer protection. Now, of course this does not mean they have to do business with him in the future, but it certainly does not mean the OP's friend has any moral, legal, spiritual or other reason to pay them.

Just MHO!

mia,

you cannot file chp. 13 bankruptcy if you owe more than $1 million--you must file chp. 11. thats my only guess why he would do that.

IMO, there is no reason to carry the Amex Card if he already has another card.

From my understanding you can get a AMEX logo card that is not issued directly by AMEX. For example, Bank of America has a AMEX card that is issued by BOA with a Amex logo. AMEX will blacklist for life if there are not paid after a BK.

Not worth it IMHO. The debt has been discharged and it is GONE.

end result:

he wanted starwood points. AMEX gives those.
Cant do it--certainly cant justify giving anyone $8000 for them.
Wife has AMEX card. She gets the SPG, he does everything else with Visa/MC.

Prob solved.

Thanks for all tips and advice! I have passed it along and yet, this is a reminder to anyone who files...

It DOES stick with you even as the powers that be tell you that things "go away" in 10 years. They apparently do not. I have also learned a lot about this stuff in the process but I have no intention nor need to file such horrors.

:)MM

I wonder if they'd take him as an authorized user on his wife's account. I've never heard of anyone being rejected for that...

I wonder if they'd take him as an authorized user on his wife's account. I've never heard of anyone being rejected for that...

They do. I tried to add an employee on one of my business accounts who had filed bankruptcy and was denied.

AX has made no guarantee that paying $8K will give anything back other than $8K reduced from his bank account PLUS being treated like any Joe Blow when submitting an app (and probably worse). I can't imagine that most people would get $8K of extra value (that couldn't be reasonably-replicated elsewhere) by not having a miles/points-affiliated AX card.

AX has made no guarantee that paying $8K will give anything back other than $8K reduced from his bank account PLUS being treated like any Joe Blow when submitting an app (and probably worse). I can't imagine that most people would get $8K of extra value (that couldn't be reasonably-replicated elsewhere) by not having a miles/points-affiliated AX card.

precisely!

Which is why I think they are worse than other banks out there despite their good rewards gigs with SPG and others.

Other banks like BofA will note that you had a filing but may still issue you a card if your standings are good and you are no longer listed as having a filing on your credit. Why, then, wont Amex? Isnt this in part what the provision of filing sort of does? Or do they assume that people who file assume that they can just use the law to pull a fast one and then do it again and again? I think some people just had no choice. I can understand that no matter the reasons, the results must stink and they certainly do last forever, as proven by Amex being so... obtuse. It wants to collect on something that legally was kinda sorta taken off the books. Now, maybe filing gets into the moral or ethic make up of things but on the other hand, like I said, some people just HAD to for reasons they could not control and they were not scammers who use people. In the old days they'd become servants. Now should we, what, toss them in jail or make life doable? I can see that getting the Amex is a luxury, but on the other hand, what DOES a person who had bad times 11 years ago have to do to become normal again? Remember, they HAD NO CHOICE. IT would be like if you were an alcoholic. You learn to deal with it and move on over a long time. how much should you pay say, 11 years after not having a drop? Doesnt seem right, that's all.

AX has made no guarantee that paying $8K will give anything back other than $8K reduced from his bank account PLUS being treated like any Joe Blow when submitting an app (and probably worse). I can't imagine that most people would get $8K of extra value (that couldn't be reasonably-replicated elsewhere) by not having a miles/points-affiliated AX card.

Paying off the $8,000 will un-blackball you from Amex, but you have to ask if it's worth it, especially since the debt is expunged from your credit file due to the bankruptcy. Amex is a good product for some things, but to have to spend $8,000 to "clear your name" is questionable.

Amex is stuck-up in that regard, IMHO... This "blackball effect" only ads to their marketing strategy of making their products seem "exclusive."

Paying off the $8,000 will un-blackball you from Amex, but you have to ask if it's worth it, especially since the debt is expunged from your credit file due to the bankruptcy. Amex is a good product for some things, but to have to spend $8,000 to "clear your name" is questionable.

Amex is stuck-up in that regard, IMHO... This "blackball effect" only ads to their marketing strategy of making their products seem "exclusive."

you had said in your post that showed up in my email (but edited out later) these words...

As with any bankruptcy, if you plan on doing
business with a certain creditor in the future, its
best to leave those out of the bankruptcy
proceedings and pay them off.

I agree with this but what everyone must understand is that when someone gets to the lowest point in their life where they feel they MUST file (for reasons of their own that many here can never understand) they certainly do not know about future business thoughts at that dark moment. They assume, as many lawyers and experts would inform them, that at the very least, within about 10 years (that's a VERY long time BTW) they MAY be back to normal to some degree. This turns out to be kind of wrong, but who knew.

I guess looking back, his moral and ethical 'payment' is to end up with this reality in his face right now. There is and never will be a new normal. Even if he were to pay off every old debt to clear a record of sorts, it still will be there.

It's sort of like in Massachusetts (and maybe other states now) how you have your driving record used to determine your insurance score and yearly rates. If you had a speeding ticket say, 4 years ago, this will affect your points and the cost of your insurance. Ok, so after so many years (I think it's 6 or 7) this drops off the insurance and you are effectively back to the premium level with no extra costs or surcharges... BUT

the state has what's called a driving HISTORY and this is a far more indepth, lengthy document that includes EVERY infraction you ever had since the day you got your license, guilty or not. Even if you went to court, fought it and won, thereby never receiving any negative points on your insurance, the ticket shows up. I have seen quick court officer types try to squiggle old tickets like that in there to unsuspecting drivers so they fumble and lose a case when fighting a new ticket. Suddenly the judge listening starts to imagine this guy speeds all the time even the scammy officer was merely twisting old information to make him look bad for something he was found not guilty for 10 years ago. horrible but true.

In the end, the only way to NOT have the problem is to simply not have the problem, and that is hard to do for some, no matter what their intent or personal situation. oh well. He lives on without an AMEX and is probably better to leave it at that.

They do. I tried to add an employee on one of my business accounts who had filed bankruptcy and was denied.




AMEX appears to be very erratic and inconsistent.
My experience suggests that anyone who has filed a Chapter 7 with Amex as a listed creditor will never get a card from them that is a “ personal “ card either as a card holder or an authorized user. They will get a card on a business account however even if it is a small firm with the primary using their SS number as the basis of credit.

No knowledge of a Chapter 11 / 13 other than as it isn’t a full discharge it suggests AMEX didn’t take a full hit on the balance.

I would also think that AMEX would be in an odd spot if they even remotely came close to soliciting or quoting the dollar amount of discharged funds they legally cannot accept after discharge.

In any event there isn’t a card in the world worth $8K.

I’d suggest the friend investigate having his wife trump up a business and use her SS number to get a business card and add him as an additional user. They don’t ask for the SS number of the added cardholder on some business accounts. Like a business gold rewards card.

I would also think that AMEX would be in an odd spot if they even remotely came close to soliciting or quoting the dollar amount of discharged funds they legally cannot accept after discharge.

AMEX can't take collection action against the former debt, but making a special payment a requirement for being their customer again is, I believe, within their rights. It's voluntary on the part of the potential customer, though it is sort of like 'voluntary surrendering' banned objects to the TSA--you don't volunteer, you don't fly!

Okay, this doesn't square quite right to me. How can amex say Pay us 8K then we MIGHT let you have a card. Seems to me that the law requires the issuer of credit to send a written letting indicating specific credit factors that lead to their decision. Those factors are correctable in some manor. I'm not a lawyer, but it seems like they don't really want put the "for $8K you can have a card" in writing because it's probably not legal.

I think it is more like, "pay us $8K and we will consider you not to have defaulted". AmEx does indeed have the right to deny granting credit to those customers who have previously defaulted on their obligations.

Do I think the OP's friend should pay? No.
Do I think AmEx can ask them to pay as a condition of getting a new account? Yes.

Okay, this doesn't square quite right to me. How can amex say Pay us 8K then we MIGHT let you have a card. Seems to me that the law requires the issuer of credit to send a written letting indicating specific credit factors that lead to their decision. Those factors are correctable in some manor. I'm not a lawyer, but it seems like they don't really want put the "for $8K you can have a card" in writing because it's probably not legal.


I'd venture a guess the $8k was'nt part of a Chpater 7, 11, or 13. It was more than likely a defaulted amount that was never foramlly discharged by a court hence the " request " for the money back to buy it out of the deadbeat list. The deadbeat list is very different from the discharged list. One never does get off of the discharged list with AMEX no matter what. ( For a personal application that is )