What is your advice if I am way over my head in debt? 11 Answers as of May 09, 2017

I have to move out of my rental by the end of March and I have to move. I have put in a resignation letter at work for the 3rd week in March. I have been working with National Debt Relief for several months trying to get out of debt. I cannot. However, I want to cash out my 401k to start over. What will it cost me? I have no money.

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Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
DO NOT CASH OUT YOUR 401K. That money is protected from creditors. It loses that protection when you cash tit out. See local counsel about a ch7 case.
Answer Applies to: California
Replied: 5/9/2017
Eranthe Law Firm
Eranthe Law Firm | Cate Eranthe
My advice is that you go and talk to a knowledgeable local attorney who specializes in debt relief and bankruptcy. They can discuss all the facts of your situation with you and give you some suggestions. When I read what you wrote all I come up with is more questions. This is a very fact specific area of the law and too many details are missing. I would caution you against cashing out the 401k because it will create more debt in the form of tax penalties. You may decide that you still need to cash it out but please get as much information as you can before you decide. Good luck.
Answer Applies to: California
Replied: 5/7/2017
Stephens Gourley & Bywater | David A. Stephens
Cashing out your 401k, unless it is small, is generally a poor choice due to income taxes and possible penalties. It is also an exempt asset if you need to file bankruptcy to eliminate debt.
Answer Applies to: Nevada
Replied: 5/5/2017
Ronald K. Nims LLC | Ronald K. Nims
I'm not going to call National Debt Relief a scam but I will say that I've had clients in debt relief programs that have paid a lot of money and their debts are higher than when they started. DEFINITELY, DO NOT TAKE OUT YOUR 401(k) MONEY UNTIL YOU'VE TALKED TO A BANKRUPTCY ATTORNEY. Bankruptcy can eliminate your debt or put you on a court ordered payment plan without sacrificing your retirement funds.
Answer Applies to: Ohio
Replied: 5/5/2017
GARCIA & GONZALES, P.C. | Richard N. Gonzales
Go meet with a BK lawyer face to face. Without more information, filing CH7 seems to be your only option. Do NOT take out the 401(k) money until you meet with a lawyer. There is life after bankruptcy. Good luck!
Answer Applies to: Colorado
Replied: 5/5/2017
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    I wish you had provided me with some useful information such as how much your debt adds up to, when you last used credit, and how much you have available after covering necessary living expenses, to allocate towards paying your debts. As a general rule, cashing out your protected 401K to pay debts is usually a very bad idea, because you will pay a sizable tax penalty to do this.
    Answer Applies to: Nevada
    Replied: 5/5/2017
    Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
    Obviously a bankruptcy is definitely worth considering. I would suggest that you limit the size of the withdrawal from your 401(k) to enough to (a) meet your immediate needs for just a few months until you can reasonably expect to find a new job; and (b) pay the costs and fees of a bankruptcy. The filing fee for a Chapter 7 is $335; for a Ch. 13, $310. Lawyers will ask for an advance payment ('retainer') in an amount they will estimate based on how much work the filing apparently will require. In my office, we usually ask for a retainer of $2,000 for a Ch. 7; and $2,500 to $3,000 for a Chapter 13. It's not really cheap, but it can be a lifesaver for people who really need it.
    Answer Applies to: Wisconsin
    Replied: 5/5/2017
    Bunch & Brock, Attorneys-at-Law
    Bunch & Brock, Attorneys-at-Law | W. Thomas Bunch II
    Whatever you do, DON'T cash-out your 401k plan. It would be very important to speak with a bankruptcy attorney about your options. Most attorneys offer a free consultation where you can get enough information to make an informed decision.
    Answer Applies to: Kentucky
    Replied: 5/4/2017
    Benson Law Firm
    Benson Law Firm | David Benson
    DO NOT cash out your 401k until you speak with a qualified bankruptcy attorney in your area!
    Answer Applies to: Ohio
    Replied: 5/4/2017
    Patrick W. Currin, Attorney at Law | Patrick Currin
    I would strongly consider BK before raiding your retirement. Those funds are exempt in BK.
    Answer Applies to: California
    Replied: 5/4/2017
    Stop paying National Debt mgmt.. Do not cash in your 401K. File Bankruptcy.
    Answer Applies to: Michigan
    Replied: 5/4/2017
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