Ask The Get Out of Debt Experts Housing Retirement Related

I Can’t Afford My New House. – Tim

“Dear Steve,

My work loaded dropped off and I have 350.00 a week child support just bought a home about 4 mths ago barrowed from 401K for that and now due to lack of OT work can not make ends meet along with CC. and utilties I am behind in everything.

Not much left in the 401K fund but should I just do a harship withdraw which will only help catch me up and give me time to seek out other income

Tim”

Dear Tim,

I’m never in favor of raiding the 401(k). As long as that money remains in there it is protected from your creditors. If you take the money out you are robbing yourself of your future when you are old and can’t work.

We need to deal with the current situation, head on. If I understand you correctly, the only way the house was affordable, or your life affordable with your commitments was based on the overtime pay. Is that correct?

How much do you owe in credit cards? Besides the loss of OT pay, what has changed for you in the past four months?

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

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Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

4 Comments

  • I thought I would put the house on the market not confident it will sell in time due to market. A chance to get out of it before foreclosure. If I don’t pay the mortgage and just the others and the house dose not sell and foreclosure comes into play my credit is still damaged. Is it worth doing the above or let everything go except car due to I’m almost done with it? I don’t pretend to know the details about foreclosure.

    • Tim,

      I that’s the case then you could just stop paying the mortgage and it will take months for the house to get foreclosed on. In the meantime you can save what you can towards the future bankruptcy. You should not file bankruptcy till the house is foreclosed on and you should not send any payments towards the cards if that’s the route to follow.

      I would suggest that you click here to find a local bankruptcy attorney and meet with one now to lay out a game plan on how this will all best unfold for you.

      Seeing the situation clearly is the hardest part, you’ve come a long way already. If you meet with the bankruptcy attorney and eliminate your unknowns it will make all of this a lot easier.

      My best, you’ve got another 120 days in the house but meet with the attorney this coming week if possible. The sooner, the better.

      As far as your credit goes, I can help you rebuild it. That’s easy.

      Big hug my friend.

      Steve

  • I don’t need to go into to some of the unfairness of paying child support not that I shouldn’t pay. but it is what it is. The courts do not leave me much to live on and that’s why overtime was and is so needed. So the things that have changed in the last 4 mths. is the lack of OT. I’ve always had it. Now I know it’s not good to base income to purchase something like a home including OT but like I said it’s always been there til now. At this time I don’t see that comming back soon. As far as the closing out of the 401K currently the hardship options in place won’t alow me to do that. So my CC are at the limits and utilities like electric and water are late along with mortgage. What I need is a free mounth from everything to regroup. Below is a brife mounthly payout.

    CC#1 owe 4000.00 (late)
    CC#2 owe 1000.00 (late and over limit about 50.00)
    Mortgage 1059.00 mth. (and owe for Nov.still)
    Electric 220.00 (owe now cold weather comming)
    Water 30.00 ( can pay this)
    Auto Loan 242.00 mth(paid and just a few left)
    Auto Insurance 84.00 (due)

    • Tim,

      You are in a box. I understand the child support argument but it is fixed and can’t be removed even with bankruptcy and your income is now reduced and fixed at a lower rate.

      Your expenses are not unreasonable so unless you can supplement your income with some part time work I’m afraid it leaves you with only one real option, hand the house back to the bank, go bankrupt and rent.

      If you just went bankrupt now the only expense it would reduce is your credit card debt, assuming you’d keep the car. That reduces your monthly payments about $100 a month and that’s not going to break tis cycle.

      Steve

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