by GarySpicuzza » Sun Oct 05, 2008 10:55 am
So I'm clicking through the 857 channels last night and I stumble upon Suze Orman.
The caller says she and her husband always kept their money separate and just split the bills. Caller says husband died and had a $250,000 life insurance policy naming her as beneficiary but to her surprise he had racked up about $100,000 in debt in HIS name only. Caller said she knew there was "some" debt but had no idea it was that much.
Caller asks Suze if she should pay off that debt or should she keep the life insurance money for her future financial needs?
Simple question and the simple answer should have been keep the life insurance benefit for yourself.
But Suze wanted to know the amounts of the outstanding loans and their respective interest rates, they were between 7% to 16%.
Then Suze asks her where she could get 7% interest guaranteed and told her to pay off the $100,000 worth of SOMEBODY ELSES DEBT!
That's bad advice.
If the debt is just in your husband or wife's name ALONE that's not your bill to pay. If the creditors were concerned about the repayment of their loan upon death they would have required a collateral assignment on his life insurance policy BEFORE extending credit.
They didn't, the debtor died, they're out the money, too bad. They didn't understand the importance of the beneficiary collateral assignment information in time. Make better business decisions next time.
It's not the morally "right thing" to do to pay off that debt with your life insurance proceeds. That money is for the exclusive benefit of the person named as the beneficiary in the life insurance policy. (Florida)
Don't think for one moment the "risk" of the debtor dying isn't built into the interest rate charged on unsecured debt.
It is.
Suze's advice was geared towards not hissing off bankers and credit card companies. The caller would be a fool to unload $100,000 in the absence of a legally enforceable obligation.
Natural person named beneficiaries should keep their money.
The caller is a very smart woman for NOT comingling her money and his money and his debt with her debt.
As Tina Turner would say:
What's Love Got To Do With It?
The caller says she and her husband always kept their money separate and just split the bills. Caller says husband died and had a $250,000 life insurance policy naming her as beneficiary but to her surprise he had racked up about $100,000 in debt in HIS name only. Caller said she knew there was "some" debt but had no idea it was that much.
Caller asks Suze if she should pay off that debt or should she keep the life insurance money for her future financial needs?
Simple question and the simple answer should have been keep the life insurance benefit for yourself.
But Suze wanted to know the amounts of the outstanding loans and their respective interest rates, they were between 7% to 16%.
Then Suze asks her where she could get 7% interest guaranteed and told her to pay off the $100,000 worth of SOMEBODY ELSES DEBT!
That's bad advice.
If the debt is just in your husband or wife's name ALONE that's not your bill to pay. If the creditors were concerned about the repayment of their loan upon death they would have required a collateral assignment on his life insurance policy BEFORE extending credit.
They didn't, the debtor died, they're out the money, too bad. They didn't understand the importance of the beneficiary collateral assignment information in time. Make better business decisions next time.
It's not the morally "right thing" to do to pay off that debt with your life insurance proceeds. That money is for the exclusive benefit of the person named as the beneficiary in the life insurance policy. (Florida)
Don't think for one moment the "risk" of the debtor dying isn't built into the interest rate charged on unsecured debt.
It is.
Suze's advice was geared towards not hissing off bankers and credit card companies. The caller would be a fool to unload $100,000 in the absence of a legally enforceable obligation.
Natural person named beneficiaries should keep their money.
The caller is a very smart woman for NOT comingling her money and his money and his debt with her debt.
As Tina Turner would say:
What's Love Got To Do With It?
Posted: Tue Oct 07, 2008 12:47 am Post Subject:
Insurance covered it. But it was a huge dollar amount - and of course, that puts them into the precarious spot that if they file another claim, what could happen to their policy.
Posted: Tue Oct 07, 2008 12:50 am Post Subject:
Wouldn't their payment for coverage had gone up? I know when my hubby hit my brothers truck last winter with his riding tractor/jig rigged snow plow we had to trun it in and our policy amount (payment) jumped like $80.
Posted: Tue Oct 07, 2008 12:57 am Post Subject:
It did on renewal. But of course, he expected it. We have great rates for Landlord insurance - he was worried about being canceled.
Posted: Tue Oct 07, 2008 01:01 am Post Subject:
Yes I can see hus worry. I was afraid of the same thing after getting demolished by another vehcile and using up all my auto med pay and maybe (still waiting) having to fall back on my under-insured motorist. Lori explained to me even if I have to they can't get "rid" of me since I had no fault in the accident. Still waiting to see how that one turns out. Seems unfair she gets to move ahead with her life while I am learning to relive mine with the injuries she left me...but thats a whole other story.
Posted: Tue Oct 07, 2008 01:04 am Post Subject:
First off the single mom sister and this situation aren't even close to the same....
The "right" thing to do when a spouse dies is to first protect your own financial interests
wait! she has NO financial interest...none--she paid her bills he paid his...so what did she lose (financially) when he died? Nothing....she didn't depend on his income, right?Bankers and credit card companies use human nature to their advantage by burying you in debt and creating an indentured servant
No it's the borrower that caused this problem not the creditor, the borrower made a promise to repay this note...You are confusing me Gary it seems like you're on both sides of the fence...you rant about these ignorant people that in effect steal from mortgage companys but this is ok? Sorry, guess I'm old school, but if I sign a contract that says I'm going to pay back 'x' amount of money then by gosh that's what I'm supposed to do...period...if 'I' overextend myself that's a lack of self control on my part NOT the creditors part, they didn't make me spend this money, they simply offered it and "I" took advantage of it...so now "I" need to meet my obligation and promise to pay it back....Personally I'd work two jobs to clear that debt, before I let my husbands name be associated with anything other honest, hardworking, "stand up" kind of man he is...maybe it's just me, or me and maze, but I just don't understand this....stick it to 'em attitude...not in this situation...now, if the guy was a dead beat his whole life and left this woman pretty much penniless, well I might change my mind, but that clearly isn't the case here. And no I don't think it's either or...I think the situation dictates the outcome...or IMO what 'should' be the outcome...Nothing prevents them from refusing to offer credit without a co-borrower or without collateral
And nothing prevents the borrower from using it either...this is the same type of arguement that blame gaming establishements for people getting into financal trouble because they gamble the rent money away, or it's the liqour stores fault that an alcholic can't walk past it... :roll: I'm sorry but I'm so sick of no body taking responsiblity for their own actions! It's ALWAYS someone elses fault! In this case it's the cc company's fault for extending credit ! :roll: really? do you really believe that?Don't tell me about hard times, been there done that, have all the sympathy in the world, it was HARD to dig out but it can be done...have done it! ....all I'm getting at is it's the person that whips out that plastic, not the financial institution backing it that has the problem...
Posted: Tue Oct 07, 2008 01:07 am Post Subject:
I hear you. I see these commercials on TV for the "ambulance chaser" type lawyers and just kind of shake my head.
But sweetie...situations like yours, I hope the lawyers gets every penny they can for you.
Posted: Tue Oct 07, 2008 01:12 am Post Subject:
Thanks Life. What really disgusted me is when I started getting all those letters in the mail from atty screaming "pick me, pick me".
I wasn't the least bit familiar with any of this and when I heard life time injuries I thought I really needed one. I don't think I could have handled doing all the legistics and putting my life back together.
Lori...I was brought up old school too..Never wasted anything...pennies mattered and weren't bounced down the highway for fun or swept up in the sweeper...If its my bill I pay it...usually as soon as it comes in. Even in the times I am having now..I am not behind on one med. bill even if I only send them $10 a month.
Posted: Tue Oct 07, 2008 09:20 am Post Subject:
Lori, great post!
No I'm not on both sides of the fence.
I agree with you EXCEPT in this case the wife did NOT create the debt. That's the difference. She did NOT create the debt. It is NOT her debt. Did I mention she (the wife) in this case did NOT borrow this money? It's NOT her debt.
Regarding people legally robbing the bank with inflated mortgage loans then walking away. I don't feel sorry for them or for the banks. We'll call it contributory negligence.
My beef is more with the Barney Frank type POLI - TIC government bass towards who create these problems, then go on the tube and lament how these poor people are losing their homes when many of them are cheerfully dumping these homes after they have legally robbed the bank with the bank's and the government's permission.
That's my beef.
One more thing did I mention the wife did NOT borrow the $100,000 of debt that her loving husband racked up?
The woman who called into Ms. Suze was actually very smart for keeping her money and her debt separate from his money and his debt.
Posted: Tue Oct 07, 2008 11:46 am Post Subject:
I know you're not that 'type' fireyone...hope you know I wasn't talking about you...think you know me well enough to know that....it's the 'nothings ever my fault' people that just rub me raw....
Yeah Gary I got that she didn't rack up the debt, but she did most certainly benefit from it right? Or maybe not what was this 100k spent on? And what about her not having any financial loss experienced in her hubby's death? And in her case maybe she was smart to keep her assets, money and debt from hubby if he was irresponsible in this area...did she say what this money was spent on?
Posted: Tue Oct 07, 2008 12:47 pm Post Subject:
Ins, If he didn't want to contribute things equally in the beginning (splitting the bills) why should she pay his debt. To me he was a dead beat in the beginning by not being one household,two incomes.
I don't recall in any of this conversation where it was determined that it was the husband's idea of keeping the money and the bills separate.
Did I miss that part?
Or maybe not what was this 100k spent on? And what about her not having any financial loss experienced in her hubby's death?
It appears that this woman actually made a profit from her husband's death. That was never the intended purpose for a life insurance policy.
We, obviously, don't know whether or not this was a marriage for convenience or the traditional marriage where love actually existed.
When we die, our reputation is all that remains.
Lori, your line of thinking is in tune with mine, now whether that's actually the right way to think is just a matter of opinion.
As far as the credit card companies, yes, they are some of the biggest con artists in our economy today, but normally it is the individual who makes application for the credit card and agrees to abide by the terms and conditions of the card. Most people don't complain when they swipe the numbers off the card at the mall, but only when they get the bill.
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