Consolidating debt to avoid high interest rates or deplete 401K.
Have taken on about $50K in credit card debt and have secured mostly 0% interest rate cards that are coming due over the next several months.
I have depleted my brokerage savings but still have an IRA and 401K that I could tap into that would just barely cover the credit card debt.
I am unemployed and need to reserve at least part of that 401K and IRA cash for my monthly living expenses until I secure employment again.
I have a good credit score, pay all of my bills on time and for the most part have just been paying the monthly minimums.
I expect to earn a very favorable salary when I land a new job and I really am not worried about my ability to pay back the debt.
This is just a timing issue. My main concern is depleting the IRA and 401K and not having anything else to fall back onto except the credit.
Without employment, would I be eligible to get at least my highest debt credit cards consolidated into a personal loan? I would want to consolidate about $30k initially. What would you recommend?
This is a classic mistake many make that leaves them in a dark hole without great options.
If I look at your situation just logically, there is nothing you’ve shared that would not indicate bankruptcy is your best option.
In a consumer bankruptcy your retirement accounts would be preserved and protected. The looming impossible liabilities could be discharged and you would be entitled to the fresh start and legal second chance you are entitled to.
And then of course there is the question about the benefit of putting this behind you so you can just focus on getting reemployed, which is the required component moving forward.
Based on the lack of current income, draining protected funds to service debt and no concrete income in the near future, I would not recommend a debt consolidation loan.
Below you will find a number of resources to help you understand more about the reality of bankruptcy and why most of the stuff you hear about it is just not true.
Bankruptcy Articles and Posts You Must Read
To get ready to read the information below with the right frame of mind, please first read How Do I Get Out of Debt Quickly? Change Your Mindset.
- How to Know if You Should File Bankruptcy
- So You Are Going to File Bankruptcy. That’s Great News. Congratulations.
- Easily Rebuild Your Credit After Bankruptcy
- The Truth About Bankruptcy Success Rates
- How to Get Out of Debt Calculator
- How Long After Bankruptcy Can I Buy a House?
- Is Bankruptcy Sinful and Bad or Right and Moral? An Examination
- What Does the Bible Say About Bankruptcy? Is Bankruptcy Scriptural?
- How to Get Out of Debt. The Honest and Unvarnished Truth
- The Emotional Seven Stages of Debt
- Getting a Job After Bankruptcy
- Chapter 7 Bankruptcy – What is the Truth?
- Low Cost / Pro Bono Bankruptcy Resource Locator
- Bankruptcy Should Be the Last Resort Many Say. But That’s Just Not True
- The Ethical Considerations of Bankruptcy
- Is Bankruptcy Right For Me?
- 14 Reasons You Should Not Avoid Bankruptcy
- How to Really Discharge Your Student Loans in Bankruptcy. Many Can. But Never Try.
- Life After Bankruptcy: How to Quickly Have Great Credit and Dumb Mistakes to Avoid
- How to Find a Great Bankruptcy Attorney
- You Have Not Failed if You File Bankruptcy
Life After Bankruptcy
Please post your responses and follow-up messages to me on this in the comments section below.
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