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Dave Ramsey says: It’s OK to prioritize annuities for daily needs over debts

(Flickr/Anthony Albright)

Dear Dave,

My wife and I both lost our jobs a few weeks ago. She began a training course for a new job last week and I’ve been interviewing. We cashed in an annuity the other day because things have been tight, and we were wondering if we should use it to help continue paying down debt or simply live on it until things get better.

— Vernon

Dear Vernon,

You need to be honorable and pay your debts, but that may have to be put on hold for a while. Right now, it’s more important to have food in the house and keep the heat on.

If you haven’t done so already, contact your creditors and explain the situation. Let them know you’ll make things right with them as soon as possible. I know this is a scary situation, especially around the holidays, so make sure you two pull together and keep the lines of communication wide open. A few extra hugs wouldn’t hurt, either.

The good news is it sounds like things may be looking up. Support your wife all you can in her new job, and make sure you continue looking for work, too. A little extra money is better than none, so take on something part-time while you’re looking for a permanent position.

God bless you two!

— Dave


Dear Dave,

My father-in-law started a business as an LLC few years ago. He named all his daughters as owners, with him owning the majority share. The business failed, and now he is being sued by creditors. He told the family these creditors can’t come after us and the other siblings, because he is the majority owner. Is this true or should we get a lawyer?

— Caleb

Dear Caleb,

Your wife is probably not in danger, unless she signed paperwork making her liable for a loan or liable with a creditor. If she signed official, legal paperwork – like if she went down to the bank and signed on a loan – then she’s liable. It’s that simple. That would make her, or any of her siblings who did this, co-makers on the loan.

Your wife, and any of her sisters, who signed on trade accounts taking supplies from a supplier and paying them could also be liable. But they are not automatically liable simply because they were listed as minority owners in an LLC, or even a sub-S corporation. If it were a general partnership, there’s a possibility they could be liable. That’s one of the reasons I hate general partnerships. I hate partnerships in general, but I hate general partnerships too.

In other words, I think you’re OK. I would still advise speaking with an attorney and giving him or her all the details of this situation to be absolutely certain.

— Dave

*Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

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