CC debit and trying to find the best way to handle the situation.
We have about 55k in cc debit and have spoken with an attorney who said we make to much for chapter 7 but could go with chapter 13. My husband really didn’t like this route. I have an IRA with about 63k in it. Tell me what the pros & cons are if any to why I don’t take out about 40k and get rid of some of this debit. I am 50yrs old and currently working.
I would not recommend using your IRA to pay your credit card bills. If you liquidate any of your IRA before age 59 ½, not only will you be subjected to income taxes on the withdrawal, but you’ll also have to pay a 10% penalty to the government. After taxes and penalties you’ll have much less to work with to pay your credit card bills. For example, if you took out a gross amount of $40,000, after taxes (assuming 25% for the sake of argument) and penalties you’d only receive approximately $26,000.
The other issue is your IRA is growing tax-deferred for your retirement and if you took $40,000 out of it, you’d be significantly hindering your IRA’s ability to grow to its intended purpose. Hope this helps.
*Please consult your tax and financial advisors for your particular situation.
Mr. Bennett is a Certified Financial Planner™ professional (CFP®), Chartered Financial Consultant (ChFC®), Accredited Investment Fiduciary™ (AIF®) and Managing Partner of c5 Wealth Management, LLC. He holds a Master of Science in Finance (MSF) with Honors from Indiana University – Kelley School of Business and a BA from the University of Florida. He is currently pursuing his PhD in Economics from SMC University. Mr. Bennett has completed the Advest Institute’s advanced program on portfolio analytics and behavioral finance at Harvard University.
He was recently recognized by Washingtonian Magazine as a Top Financial Advisor and Kiplinger’s Personal Finance Magazine, the Journal of Accountancy and the American Bar Association Journal as Who’s Who of Virginia Certified Financial Planner™ professionals. In addition, he has also been recently selected by the Consumers’ Research Council of America as one of “America’s Best Financial Planners”. He is a current contributor to the Rydex Advisor Benchmarking Index. He is quoted often in the press, has been featured on CNNRadio.com and has contributed to various publications such as U.S. News and World Report, Boomerater.com, Advisor Today, Dow Jones News, Financial Advisor Magazine, Financial Planning Magazine, Investment News, The Washington Business Journal and The Washington Times.
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