[AMEX] Closed account, instantly transferred my balance to debt collection agency?

in Credit cards
5 replies 1.1K views
Hi, this is going to be a bit of a long read, but here it goes;

So, I took out my first credit card last year, being an American Express one that had a low interest rate for payments but didn't have balance/money transfers. Fast forward 6 months to December and I'd only been using it to buy fuel etc and then paying it off in full at the end of the month to try and build up my credit score, however, then I had some very expensive issues with my car totalling over £7k in repairs, instead of using all my savings to fix it I wanted to use my credit card, but, being in the UK they didn't take AMex.

So, after Googling for a while someone suggested a 'loophole' in which you setup a new PayPal account with the card and pay your other account, then you can withdraw from your bank and just pay the fees from PayPal, now, being a novice and under pressure I didn't think anything wrong with this as I thought it would be just treated as a payment and I'd pay the normal interest rate. Shortly after paying off my car repair bill my credit card was locked, I thought this may have been due to anti-fraud checks etc, but it turns out I broke the terms of service under something called "Manufactured spending" or similar, and after explaining it to me I understood that it was going to lead to the closure of my account, which I accepted. However, when asking if I had to pay off my debt in full I was told "As long as you pay minimum payments it's fine, you'll just pay interest and not be able to use your card.", which I also found acceptable.

So, the last few months I had been paying the minimum payments absolutely fine, until last Thursday (20/02/2020) when I received a letter from AMEx dated (12/02/2020) and told me that my account had now been fully closed and that I would have to pay the remaining balance off in full or they would pass the debt onto a debt collection agency, so, I spoke to some colleagues at work and came to the conclusion that I should do an interest free balance transfer on a new credit card so that I can start to pay off the debt and avoid going down the debt collection avenue. However, after successfully applying for a new credit card and setting up the balance transfer I get a letter the following day dated (14/02/2020), this letter says that AMEx have passed the debt on to "Zinc Group" collection agency and that I should now contact them instead. So, the balance transfer I had setup failed, I called AMEx and they told me it's because the account is closed and I owe the agency not them. After asking why I didn't get a chance to pay them in full first they said because my account was closed and they don't deal with debt collection.

So, out of panic I've had to take out a high interest rate loan which is going to cost me over £4k interest over 5 years because the balance transfer didn't work and because I don't want to deal with a debt collection agency as I fear it'll damage my credit score far too bad for too long. I haven't paid the agency yet and have 14 days to decide whether or not to persist with the loan.

My questions are these;
  • Did AMEx break any consumer rights when they didn't give me any time to pay off the debt after closing my account? I have had no contact since December and I haven't missed a single minimum payment on the card. If they had contacted my on initially closing my account I could have paid off the balance using a balance transfer to another card or potentially used all my savings/overdraft without taking out a loan.
  • Has them passing on the debt already tarnished my credit score further?
  • The credit agency letter talks about paying off a "one time settlement" that is lower than the full balance. The loan I took out covers the full balance as I've never dealt with a debt collection agency before I don't know what the difference is between the two payments and how they'll affect me.

Any help would be very much appreciated as this has all been pushed on me at the last second. If anyone of a legal background needs to see the letters I can photo them and crop out personal details if that would help.


  • edited 27 February 2020 at 11:26AM
    [Deleted User][Deleted User]
    0 Posts
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    edited 27 February 2020 at 11:26AM
    No, they can sell the debt on at any time.  It has no impact on your payments or your credit history.  Any issues are already caused by previous markers and any change to your credit score is irrelevant.

    You can still pay it with your savings or a money transfer card.

    If you settle for less than the full amount, it will show as such which isn't good, but if you've already defaulted, its not going to make any difference.

    Make sure you check your three files so you know what has been reported.

  • edited 27 February 2020 at 11:30AM
    boredofwinsboredofwins Forumite
    2 Posts
    First Post
    edited 27 February 2020 at 11:30AM
    You can still pay it with your savings or a money transfer card.

    If you settle for less than the full amount, it will show as such which isn't good, but if you've already defaulted, its not going to make any difference.
    But to default don't you have to miss payments? I haven't missed any payments, nor was I offered a chance to pay the full balance to AMEx as both letters were received a week after their printed date. I received the letters a week ago today and my last payment was on time.
  • That's why I said 'if' you've defaulted. I haven't seen your files.

    They can't insist you pay the full balance, but you can if you want.

  • born_againborn_again Forumite
    9.4K Posts
    1,000 Posts Third Anniversary Name Dropper
    >>high interest rate loan which is going to cost me over £4k interest<<
    So just how much do you owe?
    Could you not get a lower rate where you bank now?
    While the way it has been handled could have been better. They are within their rights to close the account and pass it on. Would have been nice to give you time to pay them direct, as passing to a 3rd party will have cost them.

    Best bet is to just pay Zinc and not mess around.
    Life in the slow lane
  • adeelh1987adeelh1987 Forumite
    37 Posts
    Fourth Anniversary 10 Posts Combo Breaker
    maybe speak to the debt collection agency and arrange a payment plan with them?, get on the phone to them before they contact you to give you a bit of an advantage, surely if they agree to this it would save you the interest for the loan?. worth a shot.
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