401k withdrawal bankruptcy
How can I withdrawl my funds from my 401k?
I owe roughly 80k on my credit cards. I’m tired of making payments which will only cover int. I was hoping to pay them off by making a withdrawal from my 401k. I had already taken the maximum allowable loans available. I tried calling to them askedif I could make the maximum allowable withdrawal, but they say paying credit cards is not a hardship. Well if I can’t pay them off, I might have to file for bankruptcy. Any help or advice would be greatly appreciated. Looks like the only way for me to do the withdrawal is if I quit my company.. I can quit my company and pay most of my credit card, but then I’m out of a job????
If you make the withdrawl, you will pay a penalty (usually about 10% of the total amount) on top of any taxes payable on the principal and interest taxed at ordinary income rates. It’s a tough decision to make because you are losing all that savings and being penalized.
Can you negotiate with your credit card companies and lenders first to work out a payment plan? Try talking to some debt counselors first before you make this rash decision.
But be careful many debt counselors may be trying to profit from your problems. I am attaching a link to the FTC website that talks about debt management agencies.
http://www.ftc.gov/bcp/conline/pubs/credit/fiscal.shtm
