Tag Archives: debt
An Inheritance of Debt
“He left me nothing but bills. Do I have to pay them?”
Unfortunately, many folks who have lost a loved one quickly find that the deceased had accrued substantial debt. Survivors are often then left with the challenges of managing this debt both ethically and legally. While the moral issue is something that should be understood, the legal obligation is what concerns most people. The usual question asked is “Do I owe the debt of a deceased family member?” The answer may shock you.
If a deceased person originated a debt that he/she alone accrued, then he/she was responsible, and you are not. In this case you should rest easy because you would have no legal obligation to pay the debt. However the debt of a dead relative may affect you due to possible responsibility of their estate to make right those obligations, thereby leaving a lot less inheritance to heirs.
There are usually only two circumstances where you may be legally responsible for a relatives debts. The first case is when you are a co-signer on obligations of the individual. This would happen when you and the deceased were co-signers on a loan such as a credit card account or a property mortgage. In those cases you were jointly and severally (together and individually) obligated. Just because one of the parties obligated for a debt passes away, it does not relieve the surviving party of their responsibility.
The other possible obligation scenario is if you are the spouse of the deceased person and you live in what is referred to as a “community property” state. These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. If you live in these states and your husband or wife dies, you will want to seek counsel from an estate attorney.
Another issue comes in feeling a moral obligation to pay a deceased relatives debts even though there is no legal obligation to do so. Before you consider this option you should take into consideration how the loss of the funds in question will affect you and your familys current and long term security. In addition, you should recognize that companies that loan money know that a certain number of their debtors will pass away owing them money. They compensate for this reality in the fees and interest they charge their entire customer base. So, the pay off of debts owed by a deceased person, by a relative, can be viewed as bonus profits for the company in question instead of an unexpected loss.
You will note that most companies protect themselves from the possibility of loss by getting multiple signers on debt instruments and placing liens on collateral such as real property, automobiles, equipment, etc so that they can either take ownership of the assets or force their sale in order to satisfy the debt. If you choose to pay off a relatives debt when you have no legal obligation to do so, that is your choice, but be sure to consider all aspects of the action before you do so.
Happy New Year! Organize Your Finances with a Secured Loan
The most popular New Year’s resolutions are to lose weight, stop smoking, and get out of debt. While we can’t address all of these in one article, we can explore how to organize your finances, the first step to getting out of debt. Counterintuitively, one way to address this issue is to consider a secured loan; however, many people do not know how to compare secured loans.
What Caused the Debt?
You cannot fix something if you don’t understand how it became broken. Therefore, the first step on the road to recovery is tracking your behaviour to discover what caused the debt in the first place.
Do you frequently make impulse purchases?
Do you hate sacrifice?
Do you reach for the credit card before considering cash?
Do you feel the need to keep up appearances?
Do you enjoy expensive toys, such as luxury automobiles?
Do you simply love new things?
You may find yourself in any of these categories, but to truly unearth the reasons behind your circumstances, you need to track your spending. You can do this by reviewing past months’ credit card bills. You can evaluate what types of loans you have taken out. You can even spend a month entering every expenditure on a spread sheet.
Whatever you do, you have to face the issues that have caused the problem and give each one a name. For example, if I buy too many clothes, I am a clothes horse. Once you give the problem a name, you can commit to change.
What Behaviours Should Cease?
First of all, you should immediately stop spending more money than you make. Here are some behaviours you can avoid that will help you meet that goal.
Stop window shopping. While you are at it, stop going into stores when you don’t need anything.
Stop eating out.
Stop carrying your credit card in your wallet.
Eliminate things that are not necessary. For example, do you really need satellite radio? Can you bring your lunch to work and avoid the cafeteria?
Immediately, throw away junk mail advertisements.
Stop driving the latest automobile.
What Behaviours Should Increase?
One of the keys to success is positive thinking. Here are some positive ways to tackle the debt issue.
Plan for expenses.
Learn how to cook great meals.
Contribute to your 401K account.
Creatively find ways to have free fun.
Get a library card.
Read personal finance blogs, books, and newspaper articles.
Scour grocery store advertisements and plan meals according to the sales.
Make more money. A part time job can help you chip away at debt.
How Can a Secured Loan Help?
Making the minimum payment on several credit cards will never get their balances to zero. Taking out a secured loan and paying off your cards is one means of eliminating the burden of debilitating interest payments.
Remember that secured loans are secured by your home, car, or other valuable possession. Therefore, you must make the monthly payment without fail. You cannot use a secured loan to organize your finances if you do not first make a clear budget and stick to it. In addition, you must immediately stop using credit cards. Otherwise, your secured loan will only exacerbate the problem.
How to Compare Secured Loans
Secured loans have many variables. You must compare the interest rates, the loan periods, and the payments. It is also a good idea to compare the reputations of different secured loan companies and choose one that is easy to work with.
Naturally, you want a low interest rate. However, almost any secured loan interest rate will be less than the ones on your credit cards. A very important consideration is the loan’s period. A 60-month loan will cost you far more in interest than a 12-month loan, for example. On the contrary, a 60-month loan will have lower payments, and that may be what your budget needs right now.
Choosing the right secured loan is very important since its security is based on your valuable property. Make sure this is one loan that you will never default on, and you will be on track to have a new year with organized finances. The future looks bright. Now, about losing weight and putting down cigarettes, perhaps you should take on those issues next year.