I am currently unemployed and have 50,000 in debt.
I am looking to cash in my 401K to settle my debt with the credit card companies. I even called to see if they would take less than I own, by doing this I was told that the amount I don’t pay has to be claimed as income on my taxes. I will have no money left to pay income tax on 20 some thousand dollars. Do you have to take that unpaid amount as income? What do you suggest?
I suggest not doing that. If you pursue bankruptcy instead you will probably qualify for a Chapter 7 bankruptcy, be out of debt in months, have no tax liability and the money in your 401(k) will be protected from creditors.
Before you touch that money slated for retirement that would be hard to replace, click here to find a local bankruptcy attorney or get a second opinion from
My vote, it’s a bad move.