Long story short: fell less than 30 days behind on AMEX payments. Was one paycheck (17 days after a large payment was made) away from being caught up. Account was sent to collections and was passed to 3 collections agencies. I made regular monthly payments to each collection agency. Exercised my rights under the Fair Debt Collection Practice Act explaining I could not pay the balance in full and told them what I could afford to pay. Each agency accepted my payments until the account was passed into the hands of a law firm that deals in creditors' rights. Firm has sent two letters dated Sept. 9, 2010 mailed four days apart each having a different attorney's name and signature. I have read some complaints about the firm that cause me to question its integrity despite a glossy website and bios that indicate the attorneys have impressive pedigrees. My question is: can this firm take legal action as they have threatened when I have consistently made monthly payments over the past 13 months? My googling has indicated legal action is taken when a debtor stops paying on an account. That is not the case here.

Well first if it's a regular AMEX account, payment is due in full each month. So if you did not pay in full the account is delinquent. If the account is delinquent, then can sue for the balance.

On the other hand, if the amount is small enough, this may go into small claims court. Where the judges will be more inclined to take into account that you have been making regular payments. Of course, if the payments are not reducing the principal that could also be a problem.

Thank you for your information. No, this is an Optima account which allowed monthly payments. Most AMEX accounts nowadays do not demand balances to be paid in full; both of mine allowed monthly payments. Unfortunately, as with many individuals after graduate school, I fell into financial hardship shortly after graduation, in addition to, I was hired by an individual who broke salary promises which made finances worse. I communicated my financial situation to AMEX after I graduated in 2007 to inform them about why my payments were delinquent.
Statue of limitations on credit card debt in the State of Washington is 3 years. Is that to the exact date, month?
This debt became delinquent in 2007. I do not have anything of value to sell so is it common for these types of law firms to take expensive legal action? If I were to lose my home over any type of legal action, that would leave me homeless; my shaky credit score is now ruined so I cannot even rent an apartment. I pay cash for everything including including my professional licenses, liability insurance, etc.; those fees that allows me to work. Can they take "everything," so to speak, to leave me unable to care for myself, car, home, medical costs, food, clothing, etc. I understand the Washington State garnishment laws; however, I have read that this particular law firm goes for the carotid artery. Is filing Chapter 13 my only recourse to protect my home which is my only asset? I do plan to contact this firm by letter but before I do, I am gathering information on all my options. I appreciate any information so that I can assess my option from as many different directions as possible.

Statute of Limitations goes from the date of last ACTIVITY. So if you have been making payments then the SOL has probably not expired.

Generally your home and personal belongings will be safe from a suit over unsecured debt. While poverty is not a defense against a suit, your willingness to try and work out something will help in court.