Should I use my 401k to avoid bankruptcy? 4 Answers as of October 19, 2010I have been behind on mortgage and credit card payments for several months. I am a single person with no family members who can help me with money problems. I have heard that you can borrow money from your retirement to help pay bills. Is it better to avoid filing for bankruptcy or to keep the money in my 401k?
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That is a question that can only be answered after a comprehensive consultation with both a bankruptcy attorney and your accountant. There are significant tax consequences to using 401k money prior to retirement age, and you need to weigh all the costs and benefits of each option and see what's best in your situation. There is no one yes or no answer.
Answer Applies to: California