Retirement funds for settlement

[loose tooth]

I am just wondering if anyone out there had ever used retirement funds to help settle cc debt. I know most will recommend against it, and I am aware of the tax implications (in my case, I would be taking out of IRAs, so taxes would be implicated)

[AISLE4]

Why would you do that? Your IRA is protected. Creditors can't get to your IRA even if they sue and win...unless it is a business debt.

[loose tooth]

Well, to clear the cc, get rid of a debt, and get them off my back. to me it would be worth it. I am still young, have a pretty good retirement going as it is. Even if I took 4k out.

Any other opinions

[qtptute]

Do you actually owe the debt?

Are you paying the JDB or the OC?

Are you paying an amount you ACTUALLY owe or the amount they say you owe? (There's a difference)

[loose tooth]

Right now, it's still the OC.

[qtptute]

What about the rest of the questions?

[loose tooth]

Do I owe the debt? Yes

Am I paying the OC? I am 5 months past due. About to be charged off. No JDBs involved.

Do I actually owe it? I charged it. I signed the receipts.

What are you getting at. I am new to this stuff. I want to avoid CA's, because they seem like such a pain in the a$$ to deal with. I'd like to reach a settlement before they send it off to their assigned CA's. I am dealing w/ citi and really don't want to get sued. In my state, they can garnish.

[qtptute]

Well, the other questions are rather pertinent if you want information. Thanks for finally "answering" them.

But the real question still remains Are you paying an amount you ACTUALLY owe or the amount they say you owe? (There's a difference!!!)? Yes, you signed the receipts, got the bills, etc. but did they SECURITIZE your credit card? Most likely. The amount they are asking is not the actual amount you owe. Are you getting what I am talking about? Probably not.

WARNING - RANT ABOUT TO BEGIN - GETTING ON MY SOAPBOX -

I understand you are a newb, but use your common sense and when someone is asking you questions, you should answer them without them having to pull your teeth to get an answer out of you. This is why consumers think so lowly of attorneys and their staff, because they fail to do what they are asked and then turn around and blame us for their mistakes. If you don't know the answers or don't want to publicly display the answers for the world to see, then DON'T COME TO A PUBLIC FORUM and ask personal questions that you want answers for. Find an attorney in your area to help you. Most consumer protection attorneys don't charge a fee to take your case. But since you are still with the OC, then they may charge you a fee about the amount of what you owe to help you. Or in the alternative, you could do some searching on this forum (look at the bar that says User CP, etc you'll see SEARCH click there and you can search for OCs and how to make deals with them. Like I said, use your common sense, please.

GETTING OFF MY SOAPBOX - SITTING DOWN - OPENING UP A BOTTLE OF TEQUILA AND TAKING A BIG OL' SWIG!

[rella5]

dang girl, little early for tequila, but "its 5 oclock somewhere"

I don't want to hijack the OP's thread, is it ok if I PM you?

[qtptute]

Rella - absolutely PM me anytime.

[someonesomewhere]

I am just wondering if anyone out there had ever used retirement funds to help settle cc debt.

I would suggest that you remain disinclined to acquiesce to your desire to reconcile the indebtedness thru such an approach.

Means no, at least not without a really good reason.

SWMBO and I are trying to buy a home. I'm weighing the possibility of using IRA money as a downpayment. IRS rules, I'm given to understand, permit up to $10K to be used for a first time purchase without penalty. I'm still unclear on whether it can be used out of a Roth, a Traditional, or either. If it's Roth only, then one could roll the money from a Traditional to a Roth, pay the taxes (but no penalties), and then pull the money outta the Roth.

The other option I'm weighing is negotiating a PFD (to get rid of two collections) and using IRA money, paying the taxes and penalty.

Despite what's happening around the country, housing market in the Seattle area remains very strong. SWMBO and I could have gotten into a place 2 years ago, 100% financed, when the subprimes were all but giving mortgages away. But I couldn't get SWMBO to budge and make the leap. If we had, we'd probably have upwards of $75K in equity right now so an interest only loan woulda been no big deal. With the subprime market collapsing, and no bubble burst anywhere in sight, we're close to be priced outta the market up here.

[loose tooth]

Well, the other questions are rather pertinent if you want information. Thanks for finally "answering" them.

But the real question still remains Are you paying an amount you ACTUALLY owe or the amount they say you owe? (There's a difference!!!)? Yes, you signed the receipts, got the bills, etc. but did they SECURITIZE your credit card? Most likely. The amount they are asking is not the actual amount you owe. Are you getting what I am talking about? Probably not.

WARNING - RANT ABOUT TO BEGIN - GETTING ON MY SOAPBOX -

I understand you are a newb, but use your common sense and when someone is asking you questions, you should answer them without them having to pull your teeth to get an answer out of you. This is why consumers think so lowly of attorneys and their staff, because they fail to do what they are asked and then turn around and blame us for their mistakes. If you don't know the answers or don't want to publicly display the answers for the world to see, then DON'T COME TO A PUBLIC FORUM and ask personal questions that you want answers for. Find an attorney in your area to help you. Most consumer protection attorneys don't charge a fee to take your case. But since you are still with the OC, then they may charge you a fee about the amount of what you owe to help you. Or in the alternative, you could do some searching on this forum (look at the bar that says User CP, etc you'll see SEARCH click there and you can search for OCs and how to make deals with them. Like I said, use your common sense, please.

GETTING OFF MY SOAPBOX - SITTING DOWN - OPENING UP A BOTTLE OF TEQUILA AND TAKING A BIG OL' SWIG!

I thought I answered your questions. Sorry if you think I am ignorant and have no common sense. I graduated w/ a 4.0 from college, so I must have common sense. However, this credit stuff is new to me so please don't insult me. If you think I am not using my common sense, don't even bother to post. Maybe your questions are not CLEAR enough.

Yes, after your explanation of what i owe, don't owe I finally understand. Please don't assume I don't understand after it is explained.

As for all of you out there who have helped. Thank you for your answers without telling me that I don't have common sense.

[qtptute]

I thought I answered your questions. Sorry if you think I am ignorant and have no common sense. I graduated w/ a 4.0 from college, so I must have common sense. However, this credit stuff is new to me so please don't insult me. If you think I am not using my common sense, don't even bother to post. Maybe your questions are not CLEAR enough.

Yes, after your explanation of what i owe, don't owe I finally understand. Please don't assume I don't understand after it is explained.

As for all of you out there who have helped. Thank you for your answers without telling me that I don't have common sense.

OK, maybe I missed something, what in the world does a 4.0 college grade have anything to do with common sense? It means you are smart . . . you have book smarts it does not necessarily mean that you have common sense smart. No offense, but that is the way it is.

All we ask here is for people who are newbs is to do a little investigative work first, read a little (with a 4.0 you should be able to handle that) and then if you can't find your answers, go ahead, ask away. People here, including myself, are willing to help, some are attorneys or staff of a law firm, like myself and some others have great understanding of the laws and have had really good luck with goodwill letters and dispute and validate letters.

I thought my questions were rather clear, precise and asked exactly for an answer to which you still have not divulged.

I'm just going to end this now. Otherwise, someone will kick me out.

No offense loose tooth, but please do yourself a favor, do some research first and read some on this site. I am sure that you will find your answer to whatever you are looking for, since you haven't answered the questions asked.

I'm off to find the bottle of Tequila again.

[qtptute]

I would suggest that you remain disinclined to acquiesce to your desire to reconcile the indebtedness thru such an approach.

Means no, at least not without a really good reason.

SWMBO and I are trying to buy a home. I'm weighing the possibility of using IRA money as a downpayment. IRS rules, I'm given to understand, permit up to $10K to be used for a first time purchase without penalty. I'm still unclear on whether it can be used out of a Roth, a Traditional, or either. If it's Roth only, then one could roll the money from a Traditional to a Roth, pay the taxes (but no penalties), and then pull the money outta the Roth.

The other option I'm weighing is negotiating a PFD (to get rid of two collections) and using IRA money, paying the taxes and penalty.

Despite what's happening around the country, housing market in the Seattle area remains very strong. SWMBO and I could have gotten into a place 2 years ago, 100% financed, when the subprimes were all but giving mortgages away. But I couldn't get SWMBO to budge and make the leap. If we had, we'd probably have upwards of $75K in equity right now so an interest only loan woulda been no big deal. With the subprime market collapsing, and no bubble burst anywhere in sight, we're close to be priced outta the market up here.

First off, thank your lucky stars you didn't get into a subprime. The foreclosure rate in a subprime exceeds 60%.

Tax implications are real complex. Even for those of us who actually practice law, we always talking to a tax lawyer. That being said, if paying off the CAs will raise your score by enough to get you out of subprime (and it probably won't) then you should consider paying the CAs.

Once you go to about 5 or 6 months past due, and they are reporting 6's and 7's on your CR, you should not pay ANYONE. You credit score will only plummet when you pay them.

Remember that your IRA money is protected from collections in ALL states and under ALL circumstances (yes, even business debt). While we tend not to recommend using IRA money for down payments, that is one of the few things that might be an acceptable use of that money. As long as a creditor who obtains a judgment can't get a lien on the house.

If you are in a Tennants by the Entirety state, being married will protect any home purchase (for a first home) that you make. It does not protect vacation homes. There are some exceptions, if you are in a community property state, there are exceptions to that too.

[AISLE4]

qtptute, a retirement plan that covers only a business owner and his or her spouse is not sheltered from creditors by ERISA. I know the Consumer Protection Act of 2005 protects IRA assets and other non-ERISA plan assets from a creditor's claim in bankruptcy, but I thought this did not to extend to business debt. Do I have that wrong? I hope I am wrong.

[qtptute]

qtptute, a retirement plan that covers only a business owner and his or her spouse is not sheltered from creditors by ERISA. I know the Consumer Protection Act of 2005 protects IRA assets and other non-ERISA plan assets from a creditor's claim in bankruptcy, but I thought this did not to extend to business debt. Do I have that wrong? I hope I am wrong.

It depends on the terms of the plan. If it is not ERISA qualified, then you have to look to state exemptions. If it is ERISA qualified, it doesn't matter what the debt is for, it is exempt.

[gypsie]

Well, the other questions are rather pertinent if you want information. Thanks for finally "answering" them.

But the real question still remains Are you paying an amount you ACTUALLY owe or the amount they say you owe? (There's a difference!!!)? Yes, you signed the receipts, got the bills, etc. but did they SECURITIZE your credit card? Most likely. The amount they are asking is not the actual amount you owe. Are you getting what I am talking about? Probably not.

WARNING - RANT ABOUT TO BEGIN - GETTING ON MY SOAPBOX -

I understand you are a newb, but use your common sense and when someone is asking you questions, you should answer them without them having to pull your teeth to get an answer out of you. This is why consumers think so lowly of attorneys and their staff, because they fail to do what they are asked and then turn around and blame us for their mistakes. If you don't know the answers or don't want to publicly display the answers for the world to see, then DON'T COME TO A PUBLIC FORUM and ask personal questions that you want answers for. Find an attorney in your area to help you. Most consumer protection attorneys don't charge a fee to take your case. But since you are still with the OC, then they may charge you a fee about the amount of what you owe to help you. Or in the alternative, you could do some searching on this forum (look at the bar that says User CP, etc you'll see SEARCH click there and you can search for OCs and how to make deals with them. Like I said, use your common sense, please.

GETTING OFF MY SOAPBOX - SITTING DOWN - OPENING UP A BOTTLE OF TEQUILA AND TAKING A BIG OL' SWIG!

Damn, that was harsh! and a bit dramatical. Typically I respect the info you give but in this case- way over the top!

[elyse449]

Damn, that was harsh! and a bit dramatical. Typically I respect the info you give but in this case- way over the top!

Agreed. Completely agreed.

Elyse

[elyse449]

I am just wondering if anyone out there had ever used retirement funds to help settle cc debt. I know most will recommend against it, and I am aware of the tax implications (in my case, I would be taking out of IRAs, so taxes would be implicated)

Have you researched your other options? Well, it's a big step and one you wouldn't have to take unless you absolutely had to. In the end, only you can decide what is best for you because your situation is unique to you as an individual. My only suggestion is to make sure you settle each of your debts with careful thought and planning.

I will PM you.

Elyse

[elyse449]

I thought I answered your questions. Sorry if you think I am ignorant and have no common sense. I graduated w/ a 4.0 from college, so I must have common sense. However, this credit stuff is new to me so please don't insult me. If you think I am not using my common sense, don't even bother to post. Maybe your questions are not CLEAR enough.

Yes, after your explanation of what i owe, don't owe I finally understand. Please don't assume I don't understand after it is explained.

As for all of you out there who have helped. Thank you for your answers without telling me that I don't have common sense.

Your fine. Don't worry about it. You are new at this, most of us understand that. Oh, and congrats on the 4.0 in college! I have to say that because although some may view them as "just book smarts" I happen to think a lot of folks that follow through and bother with a college education. I wish I could've. Either way, credit crap is definitely a WHOLE DIFFERENT BALL game and no reasonable person expects you to know it at the flip of your head, you aren't Genie for pete's sake. Just keep reading here and keep learning, that's how the rest of us did it. Above all else, don't give up.

Elyse

[sambabchip1]

Your fine. Don't worry about it. You are new at this, most of us understand that. Oh, and congrats on the 4.0 in college! I have to say that because although some may view them as "just book smarts" I happen to think a lot of folks that follow through and bother with a college education. I wish I could've. Either way, credit crap is definitely a WHOLE DIFFERENT BALL game and no reasonable person expects you to know it at the flip of your head, you aren't Genie for pete's sake. Just keep reading here and keep learning, that's how the rest of us did it. Above all else, don't give up.

Elyse

if it were me i take the 4k out. you always can work and make it up. but once the ca are in, you credit will suck for longer that it will take to put back the 4k.

thx

sam

[blooker]

I am contemplating doing the same. I am still young so this won't effect me so much. Even if I stop contributing to repay the loan, my employer will still contribute 6% regardless. I read articles about the tax and investment disadvantages to taking a loan from your 401k. The money will be taxed twice. You repay with after tax income and then you are taxed again when you retire. The advantage is that you pay the interest to yourself instead of a bank. My interest is prime rate plus 1%. If I take the money out I will be losing the interest that I am currently earning. My annualized return is around 15%.

So why am I considering this? Many of my baddies will fall off this year or early next year. I still have quite a few that will not fall off until 2009. I can't wait until 2009 to buy a house. The cost of homes are going up and I am losing several thousands by not being a homeowner. I am losing the tax advantages of being a homeowner. I just look at my parents for example. They purchased their home in southern California for just over 100K. They paid it off in 15 years. Their mortgage was $695.47 when everyone else's mortgage was 4-5x higher. Their house is worth 6-8x what they paid for it. They say that they will never sell it because they would never be able to afford a five bedroom home in the area again.

Is this a good reason for taking out a loan? I am not taking it out to go buy a new car or to go on vacation.

[someonesomewhere]

I am contemplating doing the same. I am still young so this won't effect me so much. Even if I stop contributing to repay the loan, my employer will still contribute 6% regardless.

Just to clarify, are you talking about taking a loan against your 401K? If so, then it becomes even more worthwhile as you won't get hit by the IRS rules penalizing you for taking an unqualified withdrawal.

So why am I considering this? ... I can't wait until 2009 to buy a house ... Is this a good reason for taking out a loan?

IMHO, yes. I'm contemplating such a thing for the same reasons. Despite the hysterical shrieking of some over subprime loans, when you're seeing rents and property values rise faster than income, you can call the loan whatever you want but it's to your advantage to be a homeowner while you can still afford it.

Just be sure to fight for either a TL deletion or deletion of all the negative reporting. If the CC you're going to payoff is merely late 30 or 60 days, that's going to hurt your credit rating but not as much as would a CO or COLL. In any case, getting it deleted off your CR is the safest course.