Can creditors make you pay the debts to them from life insurance?

amersall

Hi folks, need some advice please.
Secured loan x amount balance.
mortgage x amount balance.
Negative equity £15,000.
Long story short. If i were to die before my hubby,he would get £50,000 Life ins.
My question is, would he be able to use the life insurance to halve the secured loan debt, thereby reducing that monthly payment by £400, as he would be running the house on just his wage and this would save over £400 a month. Would my creditors, 1 loan, 2 credit cards, 2 catalogues, total owed now £7,000,(could be cleared before i die ) be able to make him pay my debts off and not halve the secured loan?.
This is an awful dilemma for me, i dont want to leave him having to sell the house and move, and still owe mortgage and secured loan due to negative equity just to pay my creditors.
thank you xx
Btw, i wouldnt have this problem if he went first he has £72,000 death in service benefits plus £50,000 life is,and a good pension. Not making light of this fact, but thats the way it is

System

If hubby is named as the beneficiary of your life insurance then it doesn't form part of your estate and he can spend it as he wishes. However if your estate is the beneficiary then it must be used to pay off any outstanding debts (Credit Card and other debts DO NOT die with you if there is sufficient in the estate to pay them)

I assume that the secured loan is the mortgage and the house is held as joint tenants.

McKneff

Why dont you just work hard to clear your debts whilst your still alive then you dont have this dilemma.

amersall

!!!!!! wrote: »

If hubby is named as the beneficiary of your life insurance then it doesn't form part of your estate and he can spend it as he wishes. However if your estate is the beneficiary then it must be used to pay off any outstanding debts (Credit Card and other debts DO NOT die with you if there is sufficient in the estate to pay them)

I assume that the secured loan is the mortgage and the house is held as joint tenants.

Thanks for the reply,there is no will, so he is not named as beneficiary. the secured joint loan is not the mortgage, there is a joint mortgage as well. As i said there is no equity in the property. with the loan and mortgage we have negative equity of about £15,000.And of course if prices continue to fall, this will increase. I only have half the house value, and the life insurance, i suppose this is "my estate"?. So in effect there will be no money for my creditors?.Even selling the house will not cover the secured loan and mortgage fully, so where would he stand then?.

amersall

McKneff wrote: »

Why dont you just work hard to clear your debts whilst your still alive then you dont have this dilemma.

That is what i am doing!!.Just thinking if i die now.As none of us know when our number is up.

System

amersall wrote: »

Thanks for the reply,there is no will, so he is not named as beneficiary.

I meant named in the life insurance as a beneficiary. If he is then the presence or absence of a will is immaterial

amersall

!!!!!! wrote: »

I meant named in the life insurance as a beneficiary. If he is then the presence or absence of a will is immaterial

Not sure, will take a look, thank you.

McKneff

You really should make wills.

lisyloo

You really should make wills.

In general I'd agree.
But in this case what is the value?
Two married people with few assets.
The intestacy laws should be perfectly adequate in this case.

HappyMJ

Why don't you get your husband to take out another life policy on your life so that he gets more than £50k in the untimely event of your demise?

lisyloo

Why don't you get your husband to take out another life policy on your life so that he gets more than £50k in the untimely event of your demise?

I was going to suggest that too.
Life insurance is pretty cheap (as the risk is low if you are young) unless you have any significant health issue.