I am deep in debt because of bad choices I made in life, a divorce and being unable to work for several months because of a medical condition. I recently graduated and I am looking for a fulltime job. (Once I get a job, I do not believe I will earn enough to ever pay off my bills. I'm paying 32% interest on some of my credit cards.) In the meantime I cannot afford to pay the minimum balance on my credit cards. Should I go bankrupt or should I cash in all of my retirement accounts to pay off these bills? Thank you for your input.
2007-01-23 11:49:51 · 8 answers · asked by sdn90036 6 in Business & Finance ➔ Personal Finance
NO!! You will get penalized about 40% for taking out the money.
You may not be bankrupt- Read: The Total Money Makeover for tips on how to deal with debt. You may need to sell everything (car, home, toys, etc) but you may not be bankrupt.
If you are paying alimony or child support it may be worth the money to file a motion to modify your order.
2007-01-23 12:46:52 · answer #1 · answered by mldjay 5 · 0⤊ 0⤋
If your retirement account is a 401k you can borrow money without penalty as long as it is paid back within a certain amount of time. If not, I would look into getting an unsecured loan to consolidate and pay off that credit card debt. You may even be able to pay that loan back when you sell your house. Given your high credit score that seems like a good option, the only problem might be providing proof of income. And make sure that your payments on the loan are something you can afford. I think that would be a much better option than cashing out your retirement account.
2016-05-24 02:23:28 · answer #2 · answered by ? 4 · 0⤊ 0⤋
Depends on your motive. If it is simply to not have credit card bills the answer is no. If you would use the money saved to save then you might think about it. Do the math. How much interest are you earning? How much are you paying? Most people who do what you are considering end up in the same situation again except with less retirement and the same if not more credit card bills.
2007-01-23 11:54:42 · answer #3 · answered by moninicole 2 · 0⤊ 0⤋
Check into Consumer credit counseling. Me & my husband just set this up. It helps you pay off your debt quicker & with less out of pocket for you. They work with your credit card companies & come up with a plan for you. THey usually will reduce your interest rate (if yours is now 32% they may get it reduced to 10%). Taking money out of your retirement fund should be the last thing you do! Bankrpuptcy has helped alot of people. But, I think you should try to check out some sort of credit counseling. Go to the yahoo search engine & input 'consumer credit counseling services', it will most likely bring up some in your area. Good luck, being in debt is the worst thing. Especially after the problems you have alraedy had to deal with. I wish you the best
2007-01-23 11:56:49 · answer #4 · answered by Anonymous · 0⤊ 0⤋
No, not if you can avoid it. You will be penalized and pay a lot in taxes. I would only use this option as a last resort - see if you can draw a loan against your retirement plans and pay off the high interest credit cards.
2007-01-23 12:03:38 · answer #5 · answered by Phyllobates 7 · 0⤊ 0⤋
NEVER!
Avoid this at all cost1
Find other ways to generate revenue to pay off your debt!
Do not go bankrupt, you WILL get out of this mess in the long term!
2007-01-23 13:12:44 · answer #6 · answered by traderb550 3 · 0⤊ 0⤋
The bankruptcy could impact your job search adversely. Call your creditors and tell them you have no choice but to file bankruptcy. They will be very eager to talk. Tell them you need your interest reduced to 10%, and the balance cut in 1/2. Be polite, but very firm
2007-01-23 11:58:38 · answer #7 · answered by T C 6 · 0⤊ 0⤋
No
2007-01-23 11:53:15 · answer #8 · answered by Kandi 1 · 0⤊ 0⤋