How to Make a Settlement With American Express

American Express Company is one of the world's largest bank holding companies. It offers charge cards and credit cards to people around the world. Its charge cards require payment in full each month, while the company's credit cards offer a line of credit and monthly payments for people who prefer to pay over time. Like all other charge and credit card companies, American Express has some customers who default on accounts because of nonpayment. One option for resolving bad debt with American Express is to request a settlement.

Debt Settlement

Debt settlement is a strategy for resolving unsecured debt such as credit cards. American Express does not publicly discuss its policy for settlement agreements, but "The New York Times" reported in 2009 that American Express and other credit card companies were willing to settle delinquent credit card accounts for 20 to 70 percent of the balance. The exact amount depends on what American Express is willing to accept on a specific account.

Ramifications

American Express will not settle accounts that are current. The company has nothing to gain by reducing the balance on an account the account holder is paying on time. A customer seeking a settlement from American Express must miss several payments in a row to qualify. Falling three to six months behind on an American Express account could cause your credit score to drop. Also, American Express may close or restrict spending on other American Express accounts you hold.

Process

Requesting a settlement from American Express is simple and straightforward, but may require some negotiation. After falling behind by three payments you should call American Express at the customer service number listed on the back of your card or on the billing statement. Explain to the representative that continuing to pay the account as agreed is no longer possible, and you would like to resolve the balance through a settlement. It is not important to offer specific reasons for wanting to settle other than you are unable to pay. Making such a request is also possible in writing, and may be preferable because it creates a paper trail. However, telephone conversations are faster.

Negotiations

Nothing requires American Express to grant a settlement offer or agree to any specific terms. Receiving a suitable offer could require multiple phone calls or letters spanning several months. Begin negotiations by requesting a settlement of 20 percent of the balance, and ask for a counteroffer if American Express balks at that. From that point it's simply a matter of continuing to negotiate by telephone or mail until American Express makes an offer you can afford or are willing to pay.

Pitfalls

American Express could refuse to make an acceptable settlement and instead assign the account to a debt collection agency. However, settlement may also be possible through the debt collector. A debt collector could also file a lawsuit to collect on the account. You should get a settlement offer from American Express in writing before making payment. Terms of the agreement should include the settlement amount, due date and information on how American Express will list the settlement on creditor reports.