Suze Orman...what do you think?

[epiphany]

I was giving a "WHAT-IF" scenario to explain why Suze advises her listeners never to refinance to pay off credit cards, and I was using that woman as an example. The woman cannot afford her bills as it stands. She wants to refinance her home to take the cash out. IF she can't afford the new higher mortgage payment - because she is borrowing additional money - and falls behind on her mortgage payments, she will go into foreclosure.

The credit cards are unsecured debt, therefore if you stop paying them, those banks cannot come after your home. But if you cannot make your mortgage, which is secured debt, you will be foreclosed on.

I'm kinda in the middle. I think consolidating credit card debt using your mortgage is something that helps a lot of people, but what good is getting out of your credit card debt if you now can't afford the higher mortgage.

Okay. I think you were just missing the segue...doesn't make sense the way you originally pieced it together.

I did hear Suze this morning on the radio and she advocated BK over refinancing a sub prime loan.

ep

[CindyLou]

depending on how long she has lived in texas and whether a good portion of her cc debt was business related (she was self employed) she may have been able to use the homestead exemption, keep her houseam and file a chapter 7.

I was cringing as I listened to suze's advice. Not to say it ws wrong? but it shoukd have included, "make an appt with a BK attorney to explore your options"

[justplaintired]

That is kind-of the point. People have an unhealthy fear of BK, and Suze does propagate that fear.

BK is a financial tool like any other, it should not be feared.

Thanks HHM, that does make me feel a little better. It's like you said Suze does make me feel bad about our situation and filing BK.

[HHM]

That is kind-of the point. People have an unhealthy fear of BK, and Suze does propagate that fear.

BK is a financial tool like any other, it should not be feared.

[jetset]

That is not true. Consolidating credit card to secured mortgage debt is usually more costly in the long run, people tend to not stop using their credit cards after they do the consolidation, and consolidating limits your options with the debt in the future.

I also don't believe in spreading your credit card bill over a thirty year period, but you kinda took my statement out of context. I do believe consolidating can help a lot of people avoid bankruptcy. Other people of course will not learn their lesson.

Like I said though, what good is consolidating if you are just going to end up losing your home in the end. There are pros and cons, but when your paying 28%-35% interest on credit card balances of 130k, and your sitting on a lot of equity, and at the same time facing bankruptcy, it's hard to find a reason not to tap that equity - IF you can afford the new mortgage payment.

[HHM]

I think consolidating credit card debt using your mortgage is something that helps a lot of people,

That is not true. Consolidating credit card to secured mortgage debt is usually more costly in the long run, people tend to not stop using their credit cards after they do the consolidation, and consolidating limits your options with the debt in the future.

[magyar123]

Suze Orman is a snake oil salesperson

[jetset]

Thanks. I don't get it. You had me up until the second paragraph and I am not really sure what you are saying. I read it several times and it makes no sense to me. Could be the way it is written but I am not ruling out the possiblity that it is me.

Just seems to me, according to your second paragraph, the woman was better off filing in the first place. What am I missing?

As an aside, I am listening to a podcast of Bill Handel (LA radio host) right now, and he just said that Suze is going to be on his show on Monday. I will definitely hear it.

ep

I was giving a "WHAT-IF" scenario to explain why Suze advises her listeners never to refinance to pay off credit cards, and I was using that woman as an example. The woman cannot afford her bills as it stands. She wants to refinance her home to take the cash out. IF she can't afford the new higher mortgage payment - because she is borrowing additional money - and falls behind on her mortgage payments, she will go into foreclosure.

The credit cards are unsecured debt, therefore if you stop paying them, those banks cannot come after your home. But if you cannot make your mortgage, which is secured debt, you will be foreclosed on.

I'm kinda in the middle. I think consolidating credit card debt using your mortgage is something that helps a lot of people, but what good is getting out of your credit card debt if you now can't afford the higher mortgage.

[keepmine]

On the whole, she gives pretty good advice.

But, you really need to parse the context in which she gives her advice.

I watched recently where a caller asked about a garnishment and her response was basically, why would you skip out on your obligations.

She gives good financial advice for those that are in a "good" financial position. But for those that are struggling, she tends to over-emphasize the importance of credit and the "moral" obligation to make good on debts.

I think this is true about most personal finance sites. I think Your Money on MSN gives as good of advice on budgeting and retirement planning as you can get to posters who have money. God help you if you post over there with large debt levels or a past bk.
I've watched Suze for a few minutes here and there and she doesn't seem all that special to me.
I think post bk, common sense says we all need to do the same thing. First, fix what created our bk. Then, start, living below our means, save money, max out 401K's, have adequate insurance and then, go forth and sin no more {financially speaking}.

To justplaintired,

I hate it when people make these sort of statements:

We are part of the dying middle class, and the way things are going, paying our bills is about all we will ever be able to do.

I know you're stressing and struggling right now but, once you file and are discharged you need to look on the fresh start as the "sky's the limit sort of thing". Don't just settle for the status quo. You're better than that! Heck-we're all better than that!

[epiphany]

Well, the caller was a self employed woman with a home in Houston and Florida. Suze has always insisted on never using your homes equity to pay off credit cards, because it could jeopardize your ability to pay the higher mortgage. In this case, since the CC debt was costing her so much monthly ($3900.00 in minimum payments) and the woman was already falling behind on payments, she told her to refinance the one home in Houston, which had equity, to pay off the credit cards, and to rent out the home in Miami until her business picks up. She also advised her about short sales.

Let's say in the future the woman has no credit card debt but cannot afford the (now higher) mortgages. She will face foreclosure and lose her home, whereas before, with the lower mortgage before refinancing, she could have filed Chapter 7, kept her home, and discharged the unsecured debt. This is why Suze normally does not like people to refinance to pay off unsecured debts, i.e. credit cards.

jetset

Thanks. I don't get it. You had me up until the second paragraph and I am not really sure what you are saying. I read it several times and it makes no sense to me. Could be the way it is written but I am not ruling out the possiblity that it is me.

Just seems to me, according to your second paragraph, the woman was better off filing in the first place. What am I missing?

As an aside, I am listening to a podcast of Bill Handel (LA radio host) right now, and he just said that Suze is going to be on his show on Monday. I will definitely hear it.

ep

[jetset]

What was her advice for him?

ep

Well, the caller was a self employed woman with a home in Houston and Florida. Suze has always insisted on never using your homes equity to pay off credit cards, because it could jeopardize your ability to pay the higher mortgage. In this case, since the CC debt was costing her so much monthly ($3900.00 in minimum payments) and the woman was already falling behind on payments, she told her to refinance the one home in Houston, which had equity, to pay off the credit cards, and to rent out the home in Miami until her business picks up. She also advised her about short sales.

Let's say in the future the woman has no credit card debt but cannot afford the (now higher) mortgages. She will face foreclosure and lose her home, whereas before, with the lower mortgage before refinancing, she could have filed Chapter 7, kept her home, and discharged the unsecured debt. This is why Suze normally does not like people to refinance to pay off unsecured debts, i.e. credit cards.

jetset

[epiphany]

I have to disagree. A lot of the people who call into her show for advice are in deep %$@#. Tonights episode featured a caller who had 130,000 in credit card debt, and two mortgages. That's not a very good financial situation.

What was her advice for him?

ep

[jetset]

Believable stories that are half truths? Um, that sounds like really good lying.

Not up on the whole Suze thing. Have caught her show a few times, but I am with others who say that it is really for people who are already in a good financial situation.

ep

I have to disagree. A lot of the people who call into her show for advice are in deep %$@#. Tonights episode featured a caller who had 130,000 in credit card debt, and two mortgages. That's not a very good financial situation.

[epiphany]

Unlike Kimosabe or Kiyosaki or whatever his name is she adds ACTUAL useful info plus common sense. She at least gives believable stories even if they are half truths. She gives names and places and actual company names.

Believable stories that are half truths? Um, that sounds like really good lying.

Not up on the whole Suze thing. Have caught her show a few times, but I am with others who say that it is really for people who are already in a good financial situation.

ep

[robivi3]

Unlike Kimosabe or Kiyosaki or whatever his name is she adds ACTUAL useful info plus common sense. She at least gives believable stories even if they are half truths. She gives names and places and actual company names.