Version: next 12
Folder structure: pages/api/cancel-subscription/index.js
(also tried to have [userId].js instead of index.js)

Axios code:

await axios.delete('cancel-subscription', {
      params: {
        userId,
      },
    });

The axios has a base url of: "http://localhost:3000/api/"

Handler:

export default async function handler(req, res) {
  const { userId } = req.query;

    const response = await cancelSubscriptionRecord(userId);
    res.status(200).json(response);
  
}

(cancelSubscriptionRecord is a function that has DB code)

Info:
When I tried to simple down this syntax, without adding a praram, it worked:

export async function cancelSubscription(userId) {
  try {
    const response = await axios.delete('cancel-subscription');
    return response;
  } catch (error) {
    console.error(error);
  }
}

export default async function handler(req, res) {
  res.status(200).json('hey');
}