Talk of bankruptcy has reared its ugly head again today between my wife and I. We have been doing so well over the past year and have paid off almost $30,000 of our debt so far.
All of our bills are paid on time, with the exception of our primary mortgage and our business accounts. We have been working on a loan modification for our primary mortgage and the business accounts are looking like they will be going to court. We refuse to let our house go and will ultimately default on all our other accounts if need be to prevent from losing our house. As for the business accounts, any judgement will put us over the edge and either circumstance may require us to file bankruptcy.
We did look into bankruptcy last year, but decided against it because we wanted to do the right thing. We borrowed against the cards, we took the mortgages out for our homes, we owe the money. But, why not just file bankruptcy?
Bankruptcy should only be used as last resort. Bankruptcy will ruin your credit for 10 years. Not that our credit isn't in rocky shape right now, but if we can get these last couple of things worked out it will improve quickly. In today's economy it will be highly unlikely to get any type of credit. Not that we have interest in getting any right now, but in the end it all comes down to repaying what we owe and keeping our character intact.
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).] Did you enjoy reading this article? You can receive free full-text articles from Financial Elite by RSS in your email inbox daily by entering your email HERE. Your email will only be used for this daily subscription, and each email will include a link you may use to unsubscribe at any time. Also follow us on Twitter.
Showing posts with label bankruptcy. Show all posts
Showing posts with label bankruptcy. Show all posts
Monday, February 14, 2011
Sunday, March 21, 2010
Where Can I Get Help Dealing with My Credit Card Debt?
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
At the beginning of this year I had begun looking into bankruptcy. I quickly decided to seek other alternatives before going that route.
Having had six figures of debt before and paying back every penny I had decided that I could probably pay it off again. So I decided to contact my creditors and see if I could get any help.
I started with Bank of America first. I discussed their Balance Liquidation Program or BLP with them. They had offered me reduced interest rates on all my credit cards, but didn't offer waiving any late fees.
I decided to check other options before committing to the banks BLP program. A lot of people I know have considered using a debt consolidation company to help with their credit card debt. You do NOT want to go this route.
These kind of offers are usually rip-offs and can end up doing more harm than good. Now matter how good the offer they make sounds, don't do it.
These companies generally don't tell you that they will probably charge 10 percent of what you owe on your credit card balances. In the event they do end up working out a settlement with your creditors they will most likely charge you another 10 percent on the amount they "save" you.
These types of companies will most likely NOT tell you that what they have negotiated for you will destroy your credit score and that you will end up owing income tax on the amount that was forgiven. So this was not the way to go for me.
So I contacted the National Foundation for Credit Counseling. The NFCC is a network of nonprofit agencies trained to help you asses your financial situation and plan out the steps necessary for you to follow. Remember they don't wave a magic wand and make everything go away. Getting out of debt is no easy thing. Unless, you have a rich uncle willing to pay it all off for you or you hit the lottery you will have to work hard at paying off your debt.
When I made my appointment with my local NFCC I had to wait over a week to get in to see anyone. Which means there are a lot of other people in this situation. It also makes me feel good that people are looking into other options rather than throwing in the towel and filing bankruptcy.
The meeting was interesting in the fact that after laying out a quick budget that there was absolutely no reason for me to file bankruptcy and I should take the banks offer and run.
The interest rates that the banks offered could not be beat by the NFCC. The rates would have been pretty close, but it wasn't worth taking. Even though the rates were almost comparable, it would have meant I would have it reported on my credit report that I was using a credit counseling service. So going with the banks BLP was the way to go.
I have one more card to set with Chase and then all of my accounts will be under the balance liquidation program.
If you are looking for help with your credit card repayments definitely start with your bank first and see what they can offer you. If that doesn't work give the NFCC a call at 800-388-2227 or visit them at nfcc.org. They're the ones you can trust.
We also recommend:
Chase's Balance Liquidation Program is Fantastic
Should I Use a Debt Consolidation Company To Pay Off My Debt?
Bank of America's Balance Liquidation Program (BLP) Still Sucks
At the beginning of this year I had begun looking into bankruptcy. I quickly decided to seek other alternatives before going that route.
Having had six figures of debt before and paying back every penny I had decided that I could probably pay it off again. So I decided to contact my creditors and see if I could get any help.
I started with Bank of America first. I discussed their Balance Liquidation Program or BLP with them. They had offered me reduced interest rates on all my credit cards, but didn't offer waiving any late fees.
I decided to check other options before committing to the banks BLP program. A lot of people I know have considered using a debt consolidation company to help with their credit card debt. You do NOT want to go this route.
These kind of offers are usually rip-offs and can end up doing more harm than good. Now matter how good the offer they make sounds, don't do it.
These companies generally don't tell you that they will probably charge 10 percent of what you owe on your credit card balances. In the event they do end up working out a settlement with your creditors they will most likely charge you another 10 percent on the amount they "save" you.
These types of companies will most likely NOT tell you that what they have negotiated for you will destroy your credit score and that you will end up owing income tax on the amount that was forgiven. So this was not the way to go for me.
So I contacted the National Foundation for Credit Counseling. The NFCC is a network of nonprofit agencies trained to help you asses your financial situation and plan out the steps necessary for you to follow. Remember they don't wave a magic wand and make everything go away. Getting out of debt is no easy thing. Unless, you have a rich uncle willing to pay it all off for you or you hit the lottery you will have to work hard at paying off your debt.
When I made my appointment with my local NFCC I had to wait over a week to get in to see anyone. Which means there are a lot of other people in this situation. It also makes me feel good that people are looking into other options rather than throwing in the towel and filing bankruptcy.
The meeting was interesting in the fact that after laying out a quick budget that there was absolutely no reason for me to file bankruptcy and I should take the banks offer and run.
The interest rates that the banks offered could not be beat by the NFCC. The rates would have been pretty close, but it wasn't worth taking. Even though the rates were almost comparable, it would have meant I would have it reported on my credit report that I was using a credit counseling service. So going with the banks BLP was the way to go.
I have one more card to set with Chase and then all of my accounts will be under the balance liquidation program.
If you are looking for help with your credit card repayments definitely start with your bank first and see what they can offer you. If that doesn't work give the NFCC a call at 800-388-2227 or visit them at nfcc.org. They're the ones you can trust.
We also recommend:
Chase's Balance Liquidation Program is Fantastic
Should I Use a Debt Consolidation Company To Pay Off My Debt?
Bank of America's Balance Liquidation Program (BLP) Still Sucks
Sunday, March 14, 2010
Kudos for Chase...Bank of America Can Suck It
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
Well here we go again at another go around of paying off six figures of debt. The first time around took me five years and that is what I am expecting to happen again this time.
As we have discussed before so many of my friends and family members are throwing in the towel and filing bankruptcy and letting their homes go. I will admit the last time I was in this much debt I had really considered bankruptcy and I have definitely considered it again.
My thinking though is I paid of my six figures of debt before and I can do it again. There are a couple of differences between this time than last though. The first go round I was never late on any payment. This time I have been late and I am going to need some help.
So I have started going down the line and began calling my creditors. Starting with Bank of America.
Bank of America offered me a what I thought was a generous five year repayment plan. Lowering my interest and payments. I have three personal accounts and have begun working on two of them. The first one was a credit card with an interest rate of 27.99% and a payment of $820. This card now has an interest rate of 2% and a payment of $450. The second is a credit line that had a 17.99% interest rate and a payment of $279. This line now has a rate of 5% and a payment of $210.
Next I began working on Chase. Chase offered a similar plan, but a way better deal. First off Chase dropped my interest rate to zero. Did you hear that? Zip, Zilch, nada, not one cent. They offered me the same five year plan Bank of America did, but not only did they drop my interest rate to zero, they took off all the interest and waived any late and over the limit fees. Now that's what I call working with your client.
Bank of America did not have to a thing for me. They could have just sent me to collections with no deal whatsoever and their deal was better than what Consumer Credit Counseling could have got for me, but for being a twenty year client with multiple loans you think they could have done better. I guess at least it's better than nothing.
We Also Suggest:
Well here we go again at another go around of paying off six figures of debt. The first time around took me five years and that is what I am expecting to happen again this time.
As we have discussed before so many of my friends and family members are throwing in the towel and filing bankruptcy and letting their homes go. I will admit the last time I was in this much debt I had really considered bankruptcy and I have definitely considered it again.
My thinking though is I paid of my six figures of debt before and I can do it again. There are a couple of differences between this time than last though. The first go round I was never late on any payment. This time I have been late and I am going to need some help.
So I have started going down the line and began calling my creditors. Starting with Bank of America.
Bank of America offered me a what I thought was a generous five year repayment plan. Lowering my interest and payments. I have three personal accounts and have begun working on two of them. The first one was a credit card with an interest rate of 27.99% and a payment of $820. This card now has an interest rate of 2% and a payment of $450. The second is a credit line that had a 17.99% interest rate and a payment of $279. This line now has a rate of 5% and a payment of $210.
Next I began working on Chase. Chase offered a similar plan, but a way better deal. First off Chase dropped my interest rate to zero. Did you hear that? Zip, Zilch, nada, not one cent. They offered me the same five year plan Bank of America did, but not only did they drop my interest rate to zero, they took off all the interest and waived any late and over the limit fees. Now that's what I call working with your client.
Bank of America did not have to a thing for me. They could have just sent me to collections with no deal whatsoever and their deal was better than what Consumer Credit Counseling could have got for me, but for being a twenty year client with multiple loans you think they could have done better. I guess at least it's better than nothing.
We Also Suggest:
- Bank of America's Balance Liquidation Program (BLP) Still Sucks
- What's the Best Way to Pay off My Credit Card Debt If I Have a High FICO Credit Score ?
- How did This Economic Crisis Start?
- Should I Use My 401K to Pay Off My Mortgage?
- Should I Take Out a 401K Loan to Pay Off My Credit Cards?
- Follow my journey to pay off debt and subscribe by email.
- Subscribe in a Reader (RSS)
- Follow us on Twitter
- Follow us on Blogger
Saturday, March 13, 2010
Are You Ready to Come Out of the Closet...About Your Debt?
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
The first time I was six figures in debt I told no one. My ex-wife knew, but she helped contribute to the problem in the first place.
Everyone just thought I had money to burn. Especially, my family, with my mom always referring to me as her "rich son."
I was too ashamed to tell anyone the mass of debt that had been acquired. That first time though it seemed I had been forced into it. The constant arguing over money with my then wife ultimately led to our divorce. In least in my eyes it did, as she would probably say I just didn't make enough money, which was true for the lifestyle she wanted to live.
After my divorce I had come clean about the debt. Everyone was in disbelief that I had so much debt. But the debt that built up during my first marriage had begun to get cut down, left and right. It wasn't overnight, but things just seemed to line up, one after the other. After 5 years I was debt free and determined not to let it happen again.
But it did happen all over again -- six figures in debt...again! After the last time I did become the "rich son" as my mother calls me. Remaining debt free and a massing quite the savings. When this current recession hit though, I began heading in the same direction as I did before and again, I didn't tell a soul. I was once again a closet debtor.
I recently read on article at CNNMoney.com called 'The secret lives of America's debtors' and it inspired my to change the title of the Financial Elite blog to our current name. I have so many friends and family members coming clean to me on a regular basis and after reading this article and seeing so many others coming clean as well I figured I might as well as join the party.
In the article I read one wife describe how she opened a credit card without her husbands knowledge and charged it up, "I thought that I'd just pay it off each month," she said, "But it was $100 here and $200 there, and soon it was spiraling out of control." The wife suggests, "It's better to be honest," she says, "Sure, you'll probably cause a fight -- but at some point you've got to stop fighting."
My current wife of course knows our current financial situation, but at this moment only our current readers now the truth. I still haven't come clean. I guess this time around I still feel ashamed and maybe there is an ego thing attached as well. I listen to so many people having problems and I just tentatively listen without sharing with them and telling them I know what you mean.
The last time this happen to me though I was determined not to file bankruptcy and this time is no different. I didn't give up without a fight the last go around. So here we go putting up my dukes again.
So the question still remains. Will I come out of the closet? Well, I think I just did.
We Also Suggest:
The first time I was six figures in debt I told no one. My ex-wife knew, but she helped contribute to the problem in the first place.
Everyone just thought I had money to burn. Especially, my family, with my mom always referring to me as her "rich son."
I was too ashamed to tell anyone the mass of debt that had been acquired. That first time though it seemed I had been forced into it. The constant arguing over money with my then wife ultimately led to our divorce. In least in my eyes it did, as she would probably say I just didn't make enough money, which was true for the lifestyle she wanted to live.
After my divorce I had come clean about the debt. Everyone was in disbelief that I had so much debt. But the debt that built up during my first marriage had begun to get cut down, left and right. It wasn't overnight, but things just seemed to line up, one after the other. After 5 years I was debt free and determined not to let it happen again.
But it did happen all over again -- six figures in debt...again! After the last time I did become the "rich son" as my mother calls me. Remaining debt free and a massing quite the savings. When this current recession hit though, I began heading in the same direction as I did before and again, I didn't tell a soul. I was once again a closet debtor.
I recently read on article at CNNMoney.com called 'The secret lives of America's debtors' and it inspired my to change the title of the Financial Elite blog to our current name. I have so many friends and family members coming clean to me on a regular basis and after reading this article and seeing so many others coming clean as well I figured I might as well as join the party.
In the article I read one wife describe how she opened a credit card without her husbands knowledge and charged it up, "I thought that I'd just pay it off each month," she said, "But it was $100 here and $200 there, and soon it was spiraling out of control." The wife suggests, "It's better to be honest," she says, "Sure, you'll probably cause a fight -- but at some point you've got to stop fighting."
My current wife of course knows our current financial situation, but at this moment only our current readers now the truth. I still haven't come clean. I guess this time around I still feel ashamed and maybe there is an ego thing attached as well. I listen to so many people having problems and I just tentatively listen without sharing with them and telling them I know what you mean.
The last time this happen to me though I was determined not to file bankruptcy and this time is no different. I didn't give up without a fight the last go around. So here we go putting up my dukes again.
So the question still remains. Will I come out of the closet? Well, I think I just did.
We Also Suggest:
- Bank of America's Balance Liquidation Program (BLP) Still Sucks
- What's the Best Way to Pay off My Credit Card Debt If I Have a High FICO Credit Score ?
- How did This Economic Crisis Start?
- Should I Use My 401K to Pay Off My Mortgage?
- Should I Take Out a 401K Loan to Pay Off My Credit Cards?
- Follow my journey to pay off debt and subscribe by email.
- Subscribe in a Reader (RSS)
- Follow us on Twitter
- Follow us on Blogger
Friday, March 12, 2010
A New Approach to a Personal Finance Blog
[This post is written and copyrighted by Six Figures in Debt...Again! (http://financialelite.blogspot.com/ ).]
Here we go again. In more ways then one. Financial Elite is once again changing it's name. We have gone from Financial Elite to The Debt Free Advocate and back to Financial Elite. More on that in a moment.
We have been trying to find the best way to share all of our 20 years financial knowledge and over the past year and a half have seemed to just not be able to find the right audience.
We have gone from a mixture of commenting on current financial events to economic news and how they tie in with your finances. We have also shared our experiences in banking and our own financial ups and downs.
So here we are changing the name once again. This time to Six Figures in Debt...Again. This go around we are going to concentrate on actual financial trials and tribulations (not that we didn't before) but this time on our own financial trials and tribulations and how we are going to get out of them.
There have been too many people that I know just throwing in the towel and giving up and surrendering to bankruptcy and foreclosure, but in our case, we just can't let that happen.
So we will be sharing how we got into the same mess everyone else is in. How the current economic crisis is helping or hindering us and how we are going to get out from under.
So stay tuned. take lots of notes and see how we get out of Six figures in debt...Again.
We Also Suggest:
Here we go again. In more ways then one. Financial Elite is once again changing it's name. We have gone from Financial Elite to The Debt Free Advocate and back to Financial Elite. More on that in a moment.
We have been trying to find the best way to share all of our 20 years financial knowledge and over the past year and a half have seemed to just not be able to find the right audience.
We have gone from a mixture of commenting on current financial events to economic news and how they tie in with your finances. We have also shared our experiences in banking and our own financial ups and downs.
So here we are changing the name once again. This time to Six Figures in Debt...Again. This go around we are going to concentrate on actual financial trials and tribulations (not that we didn't before) but this time on our own financial trials and tribulations and how we are going to get out of them.
There have been too many people that I know just throwing in the towel and giving up and surrendering to bankruptcy and foreclosure, but in our case, we just can't let that happen.
So we will be sharing how we got into the same mess everyone else is in. How the current economic crisis is helping or hindering us and how we are going to get out from under.
So stay tuned. take lots of notes and see how we get out of Six figures in debt...Again.
We Also Suggest:
- Bank of America's Balance Liquidation Program (BLP) Still Sucks
- What's the Best Way to Pay off My Credit Card Debt If I Have a High FICO Credit Score ?
- How did This Economic Crisis Start?
- Should I Use My 401K to Pay Off My Mortgage?
- Should I Take Out a 401K Loan to Pay Off My Credit Cards?
- Follow my journey to pay off debt and subscribe by email.
- Subscribe in a Reader (RSS)
- Follow us on Twitter
- Follow us on Blogger
Wednesday, February 3, 2010
You May Still Have to Pay Even After You Foreclose
From Les Christie at CNNMoney: You lost your house - but you still have to pay
As terrible as it is to lose your house to foreclosure, at least it's a relief to put your biggest financial headache behind you, right?
Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction.
Vanessa Cory short sold her home. She negotiated the short sale and thought it was the end of it.
"My understanding was that the deficiency was negotiated away," she said. "Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it."
"After the banks foreclose, it's very common now to have large deficiencies with houses not worth the balances owed," said Don Lampe, a North Carolina real estate attorney.
"Once they have a judgement, they can pursue you anywhere," said Richard Zaretsky, a board certified-real estate attorney in West Palm Beach, Fla. "They can ask for financial records, have your wages garnished, and if you fail to respond, a judge can put you in jail."
It just doesn't look like there is any relief these days. Banks coming after you even after you foreclose is just putting the nail in the coffin. As if things weren't bad enough, forcing people to file bankruptcy after a foreclosure is just not going to get this economy going again.
As terrible as it is to lose your house to foreclosure, at least it's a relief to put your biggest financial headache behind you, right?
Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction.
Vanessa Cory short sold her home. She negotiated the short sale and thought it was the end of it.
"My understanding was that the deficiency was negotiated away," she said. "Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it."
"After the banks foreclose, it's very common now to have large deficiencies with houses not worth the balances owed," said Don Lampe, a North Carolina real estate attorney.
"Once they have a judgement, they can pursue you anywhere," said Richard Zaretsky, a board certified-real estate attorney in West Palm Beach, Fla. "They can ask for financial records, have your wages garnished, and if you fail to respond, a judge can put you in jail."
It just doesn't look like there is any relief these days. Banks coming after you even after you foreclose is just putting the nail in the coffin. As if things weren't bad enough, forcing people to file bankruptcy after a foreclosure is just not going to get this economy going again.
Monday, January 11, 2010
If Banks Truly Wanted to Help Troubled Customers, They would Hire More Staff.
Yesterday I mentioned, "I just know don't what to say anymore." What I meant about that is, so many rules are changing in the financial game it's hard to keep up with the changes and give helpful solutions.
I still think the wise old solutions we provide here are still the best and we will tweak them as need be to help in this current economic turmoil.
My frustration lies in the fact that even normal financial assistance is hard to come by. People need help and they need it now.
I have been receiving tons of questions regarding bankruptcy and mortgage loan modifications. I always suggest bankruptcy as a last resort and that consumer credit counseling from NFCC.org should come first. I do feel in a lot of cases simple loan modifications may do the trick for a lot of people. By dropping their mortgage payment (I have seen people who have had their mortgage payments drop in half) it may enable them to catch up not only on their mortgage payments, but their credit card payments as well.
Most of these consumers who ask me these questions are responsible people and are just having a rough patch right now. I have always been an advocate for doing what you have to do make your payments, but these are people who had put a nice comfortable 20 percent down on their homes. Had plenty of reserves in savings and little debt. But now a chain of events has begun to lead them to ruin.
Lois and Clark are one couple who we have talked in the past and things are just not improving for them. They knew trouble was coming 6 months ago and they were going to start falling behind. They were proactive and began calling their banks to try and get help, but were denied because they weren't behind.
So sure enough they started falling behind on their payments and banks raised their interest rates making things worse. Now 6 month later after their once 700 range credit scores have fallen, the banks are offering some help. They could have avoided all this months ago. At least they could have let them miss a payment to give them a break. Now their credit is shot and they have fallen so far behind that what the banks are offering them has come too little, too late. Lois and Clark may be facing bankruptcy.
Another couple had called their mortgage company for a loan modification or actually I should say attempted to talk to someone about a loan modification. After being disconnected, transferred, and put on hold for hours they finally were able to get to who they needed to talk to. Hours? Are you kidding me? The numbers they called were the ones the mortgage company posted on their Website for clients to call for help. Except all those numbers were no good. Only after playing musical calls were they able to get somewhere.
Do the banks think this is a joke? A game? It's time to start helping the same people who gave you the money to save your behinds. The TARP money was almost just handed to you. Did you have to wait on the phone for hours, get passed from one phone operator to another, or given incorrect information? Get your organizations organized and get these folks the help and quality customer service you so often say you you provide. Lets get this show on the road and get this economy turned around. Now!
For answers to all your financial questions check us out. Subscribe so you never miss the boat.
I still think the wise old solutions we provide here are still the best and we will tweak them as need be to help in this current economic turmoil.
My frustration lies in the fact that even normal financial assistance is hard to come by. People need help and they need it now.
I have been receiving tons of questions regarding bankruptcy and mortgage loan modifications. I always suggest bankruptcy as a last resort and that consumer credit counseling from NFCC.org should come first. I do feel in a lot of cases simple loan modifications may do the trick for a lot of people. By dropping their mortgage payment (I have seen people who have had their mortgage payments drop in half) it may enable them to catch up not only on their mortgage payments, but their credit card payments as well.
Most of these consumers who ask me these questions are responsible people and are just having a rough patch right now. I have always been an advocate for doing what you have to do make your payments, but these are people who had put a nice comfortable 20 percent down on their homes. Had plenty of reserves in savings and little debt. But now a chain of events has begun to lead them to ruin.
Lois and Clark are one couple who we have talked in the past and things are just not improving for them. They knew trouble was coming 6 months ago and they were going to start falling behind. They were proactive and began calling their banks to try and get help, but were denied because they weren't behind.
So sure enough they started falling behind on their payments and banks raised their interest rates making things worse. Now 6 month later after their once 700 range credit scores have fallen, the banks are offering some help. They could have avoided all this months ago. At least they could have let them miss a payment to give them a break. Now their credit is shot and they have fallen so far behind that what the banks are offering them has come too little, too late. Lois and Clark may be facing bankruptcy.
Another couple had called their mortgage company for a loan modification or actually I should say attempted to talk to someone about a loan modification. After being disconnected, transferred, and put on hold for hours they finally were able to get to who they needed to talk to. Hours? Are you kidding me? The numbers they called were the ones the mortgage company posted on their Website for clients to call for help. Except all those numbers were no good. Only after playing musical calls were they able to get somewhere.
Do the banks think this is a joke? A game? It's time to start helping the same people who gave you the money to save your behinds. The TARP money was almost just handed to you. Did you have to wait on the phone for hours, get passed from one phone operator to another, or given incorrect information? Get your organizations organized and get these folks the help and quality customer service you so often say you you provide. Lets get this show on the road and get this economy turned around. Now!
For answers to all your financial questions check us out. Subscribe so you never miss the boat.
Sunday, January 10, 2010
This Economy is Killing People: I Just Don't Know What to Say Anymore.
We receive questions from readers and friends all the time on what to do about their finances. As you know or can see (if you hunt around the blog) we post the questions we're asked and provide knowledgeable answers, but some of the questions are just plain out of the norm of standard financial reasoning. The main thing is, how are these things happening to people? The only thing I can come with is, this darn economy is killing people.
What is blowing me away the most is the amount of people who were making not only good money, but great money, and had high credit scores. Credit scores that were in the high 700's or even 800's. Had a the necessary six to eight month emergency fund reserve and are now talking about bankruptcy.
So when I say I don't know what to say anymore I guess I mean I am just dumbfounded. A lot of people are talking to me about bankruptcy. These same people are the people who have been financially responsible by always paying their bills on time, never had high debt aside from their mortgage and maybe a car payment, had extremely high credit scores, had significant savings, and made responsible financial decisions. Everything that I know to be right is just not good enough.
One couple I talked to yesterday had put 20 percent down on their home, has no car payments and no credit card debt until last year and is now talking about throwing the towel. A series of job layoffs has caused them to burn through their savings and take cash advances after that ran out. They have returned to work, but at less money, which combined with the debt from the credit card cash advances has caused them to be in the hole and have to advance money to make up the difference. They are now in a vicious circle that they may never get out of.
This couple has done everything right. Made a fantastic down payment on their home and did what they should have. So how much does one have to save? Is 8 months of reserves not enough? Should they have dumped their home if it was now beyond their means? But that would have meant a short sale. This world is no longer earth, but become Bizarro World.
This economy needs to be turned around somehow. Good people are going down the tubes and being caught in a catch twenty-two. Homes upside down, job layoffs, savings gone, credit shot, what is it going to take to turn things around? Stop the world I want to get off.
For answers to all your financial questions check us out. Subscribe so you never miss the boat.
What is blowing me away the most is the amount of people who were making not only good money, but great money, and had high credit scores. Credit scores that were in the high 700's or even 800's. Had a the necessary six to eight month emergency fund reserve and are now talking about bankruptcy.
So when I say I don't know what to say anymore I guess I mean I am just dumbfounded. A lot of people are talking to me about bankruptcy. These same people are the people who have been financially responsible by always paying their bills on time, never had high debt aside from their mortgage and maybe a car payment, had extremely high credit scores, had significant savings, and made responsible financial decisions. Everything that I know to be right is just not good enough.
One couple I talked to yesterday had put 20 percent down on their home, has no car payments and no credit card debt until last year and is now talking about throwing the towel. A series of job layoffs has caused them to burn through their savings and take cash advances after that ran out. They have returned to work, but at less money, which combined with the debt from the credit card cash advances has caused them to be in the hole and have to advance money to make up the difference. They are now in a vicious circle that they may never get out of.
This couple has done everything right. Made a fantastic down payment on their home and did what they should have. So how much does one have to save? Is 8 months of reserves not enough? Should they have dumped their home if it was now beyond their means? But that would have meant a short sale. This world is no longer earth, but become Bizarro World.
This economy needs to be turned around somehow. Good people are going down the tubes and being caught in a catch twenty-two. Homes upside down, job layoffs, savings gone, credit shot, what is it going to take to turn things around? Stop the world I want to get off.
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Wednesday, November 4, 2009
More People Feeling Hopeless About Getting Out of Debt Leads to an Increase in Bankruptcy
After we just talked about the turmoil of deciding to file bankruptcy or not CNNMoney.com reports personal bankruptcies are up 9%.
Number of Americans filing for bankruptcy continues to climb and the total number of bankruptcies is expected to hit the 1.4 million mark by the end of 2009. The highest number in 4 years.
The American Bankruptcy Institute reported that the 9% increase in consumer bankruptcy filings in October and the 7% jump in business related cases shows the continued stress of the U.S. economy.
Bankruptcies are up 28% from the same time last year.
What do you think? Is the economy to blame for the bankruptcies or are people just taking the easy way out? Is there a whole new keeping up the Jones' going on? Everyone else is doing it. Why shouldn't I?
Number of Americans filing for bankruptcy continues to climb and the total number of bankruptcies is expected to hit the 1.4 million mark by the end of 2009. The highest number in 4 years.
The American Bankruptcy Institute reported that the 9% increase in consumer bankruptcy filings in October and the 7% jump in business related cases shows the continued stress of the U.S. economy.
Bankruptcies are up 28% from the same time last year.
What do you think? Is the economy to blame for the bankruptcies or are people just taking the easy way out? Is there a whole new keeping up the Jones' going on? Everyone else is doing it. Why shouldn't I?
Tuesday, November 3, 2009
Is Bankruptcy a Good Way to get Out of Debt? Step #7
I had kept my massive debt load a secret for years. I knew it was wrong and I was embarassed to let anyone know. It wasn't until I was getting divorced that I began share my secret. While confiding my debt to a close friend of mine I learned I was not the only one who had a secret. My friend was in debt too. In fact even more than me. I was in debt $60,000 and he was in debt $100,000.
We both felt overwhelmed by the debt and were equally embarassed at our sisituations. Between my debt and my pending divorce I had contemplated suicide, but learning I was not alone helped me get passed that.
But when it came to our debt we felt hopeless. At one we both thought of bankruptcy as an option. It was kind of like if you jump I'll jump too. In the end we both decided against it. Feeling it was not right to do that to our creditors because we had mismanaged or finances. In the end we both became debt free.
Step #7
If you are not wanting to or able do what it takes to get out of debt and your financial situation seems too hopeless, than sadly bankruptcy may be a way out. Before you file for bankruptcy, be sure to consider the consequences not only for yourself, but for your spouse, family members, and friends. No matter what you have heard, bankruptcy is not a simple solution. Here is why:
1. Your credit will be severly damaged for seven to ten years.
2. You will be required to pay higher interest rates on loans. If you are even able to get a loan these days after filing bankruptcy.
Filing bankruptcy is actually filing a pettition under the federal bankruptcy law. You are much better filing through your attorney rather than doing it yourself. Although, you are certainly able to do so. You and your attorney will draw up a petition listing your assets and liabilities. You submit the petition to a U.S. District Court judge. If the judge accepts your petition, he or she may have some of your assets sold by the court to pay your creditors. The court will then wipe out most of or all of your debts accept:
1. Alimony and child support.
2. Most state and federal taxes.
3. Most federal student loans.
4. Any debt not listed on your bankruptcy petition.
You can learn more about bankruptcy at bankruptcyinfo.com.
Have you thought about filing bankruptcy? Did you go through with it?
We both felt overwhelmed by the debt and were equally embarassed at our sisituations. Between my debt and my pending divorce I had contemplated suicide, but learning I was not alone helped me get passed that.
But when it came to our debt we felt hopeless. At one we both thought of bankruptcy as an option. It was kind of like if you jump I'll jump too. In the end we both decided against it. Feeling it was not right to do that to our creditors because we had mismanaged or finances. In the end we both became debt free.
Step #7
If you are not wanting to or able do what it takes to get out of debt and your financial situation seems too hopeless, than sadly bankruptcy may be a way out. Before you file for bankruptcy, be sure to consider the consequences not only for yourself, but for your spouse, family members, and friends. No matter what you have heard, bankruptcy is not a simple solution. Here is why:
1. Your credit will be severly damaged for seven to ten years.
2. You will be required to pay higher interest rates on loans. If you are even able to get a loan these days after filing bankruptcy.
Filing bankruptcy is actually filing a pettition under the federal bankruptcy law. You are much better filing through your attorney rather than doing it yourself. Although, you are certainly able to do so. You and your attorney will draw up a petition listing your assets and liabilities. You submit the petition to a U.S. District Court judge. If the judge accepts your petition, he or she may have some of your assets sold by the court to pay your creditors. The court will then wipe out most of or all of your debts accept:
1. Alimony and child support.
2. Most state and federal taxes.
3. Most federal student loans.
4. Any debt not listed on your bankruptcy petition.
You can learn more about bankruptcy at bankruptcyinfo.com.
Have you thought about filing bankruptcy? Did you go through with it?
Saturday, July 18, 2009
If My Company Goes Bankrupt Will I Lose All the Money in My 401K?
You should have nothing to worry about if you can confirm your money was sent from your employer to your 401K plan. Any money you invest in a 401K is your money, not your employer's. Generally employers hire a third party like Fidelity or a brokerage, fund company, or insurance company to run the 401K, and that company will separate your money into another account that is all yours; even if that brokerage company gets into trouble.
Sunday, July 12, 2009
Do I need To Get a Lawyer If I am Having Trouble Paying My Debts?
You do not need a lawyer if you are experiencing credit or debt problems. You can negotiate debt re-payment with credit card companies or creditors yourself without any help from an attorney. You can work making changes to your credit report on your own. Especially now a days you are probably seeing TV commercials, hearing radio ads, and even magazine and newspaper ads every where you turn with attorneys who are offering you help reducing your debt and helping you avoid bankruptcy. Most of what they offer you can do yourself by following the suggestions in this blog.
I had a friend who I had helped clear up her credit report and she had consulted a credit counseling agency after we had cleaned up her report pretty good just to see if it could be cleaned up any further. The credit counseling company just about offered her a job after seeing how well she had done on her own. They admitted she had done everything they would have done for her. So repairing your credit can be done on your own. It may be time consuming, but it is worth the work to get your credit report cleaned up. There are times when an attorney can be helpful to you though. If you have been dealing with credit reporting agencies about entries that are incorrectly being reported on your credit report and you have sent letters and made phone calls for several months with little progress, it could be a good idea to see an attorney. As I said it can be time consuming, but if you have been diligently working on getting your credit report cleared up and are getting no where an attorney may be your next step. This does not mean that you should be paying a fat retainer and getting billed by the hour. Start by finding an attorney who will write a simple letter on your behalf to the credit reporting agency. Usually letterhead from an attorney will get much more attention from creditors than another letter from you and just might get you to where you need to go. If other services are needed from the attorney see if you can negotiate pricing upfront.
I have friends who had charge offs and all of a sudden years later get a knock at the door to be handed a court summons regarding their unpaid debt. If you get served with court papers, you may want to consult an attorney to at the very least review them and help understand them. If you are being sued for nonpayment of a debt and have no defense, you will probably be throwing away good money after bad to hire an attorney to defend you in the case. If you find you are unable or don't know how to reach a settlement with the creditors attorney yourself, you can hire a lawyer for the specific purpose of working out a settlement.
If you are really considering filing for bankruptcy, you should contact an attorney for a free consultation. Ask an attorney you have dealt with in the past for a referral or contact your state, county, or city bar association for a referral to an attorney in your area who specializes in bankruptcy law.
I had a friend who I had helped clear up her credit report and she had consulted a credit counseling agency after we had cleaned up her report pretty good just to see if it could be cleaned up any further. The credit counseling company just about offered her a job after seeing how well she had done on her own. They admitted she had done everything they would have done for her. So repairing your credit can be done on your own. It may be time consuming, but it is worth the work to get your credit report cleaned up. There are times when an attorney can be helpful to you though. If you have been dealing with credit reporting agencies about entries that are incorrectly being reported on your credit report and you have sent letters and made phone calls for several months with little progress, it could be a good idea to see an attorney. As I said it can be time consuming, but if you have been diligently working on getting your credit report cleared up and are getting no where an attorney may be your next step. This does not mean that you should be paying a fat retainer and getting billed by the hour. Start by finding an attorney who will write a simple letter on your behalf to the credit reporting agency. Usually letterhead from an attorney will get much more attention from creditors than another letter from you and just might get you to where you need to go. If other services are needed from the attorney see if you can negotiate pricing upfront.
I have friends who had charge offs and all of a sudden years later get a knock at the door to be handed a court summons regarding their unpaid debt. If you get served with court papers, you may want to consult an attorney to at the very least review them and help understand them. If you are being sued for nonpayment of a debt and have no defense, you will probably be throwing away good money after bad to hire an attorney to defend you in the case. If you find you are unable or don't know how to reach a settlement with the creditors attorney yourself, you can hire a lawyer for the specific purpose of working out a settlement.
If you are really considering filing for bankruptcy, you should contact an attorney for a free consultation. Ask an attorney you have dealt with in the past for a referral or contact your state, county, or city bar association for a referral to an attorney in your area who specializes in bankruptcy law.
Saturday, July 11, 2009
Time Line For The Credit Card Accountability, Reponsibility, and Disclosure Act
The Credit Card Accountability, Responsibility, and Disclosure Act will go into effect in phases over the next year and here's what it means for you:
As of August 2009
1. Statements must be mailed 21 days before the bill is due (the current time limit is 14 days)
2. Issuers have to give 45 days notice for a change in interest rate (current is 15 days)
As of February 2010
3. Issuers can no longer raise the interest rate on an existing balance, unless the balance is more then 60 days late or a teaser rate expires.
4. Teasers rates must be in effect for at least six months.
5. Except for expiring teaser rates, the rate on new purchases cannot be hiked for the first year.
6. Payments in excess of the minimum owed must first be applied to the balance with the highest interest rate,and then to other balances in descending order.
7. Over limit fees may only be applied if the consumer opts in for approval on going over the credit limit.
8. Applicants under the age of 21 must have an adult co sign , or show proof of income for approval.
9. Issuers cannot offer free sign up gifts near college campuses.
10. Issuers can no longer practice "universal default" that is raise your rates if they learn you were late on another account.
11. Issuers must indicate on statements how long it will take to pay off a balance if the minimum payments are made.
12. In calculating finance charges, issuers cannot average in daily balances from the previous billing cycle.
As of August 2010
13. Cardholders assessed a penalty APR for late payments can reclaim the lower rate if they pay on time for six consecutive months.
This good news, but watch for credit card companies really trying to sock to you for as long as they can. In the long run this will be a great thing and should help people from heading down the road to bankruptcy.
As of August 2009
1. Statements must be mailed 21 days before the bill is due (the current time limit is 14 days)
2. Issuers have to give 45 days notice for a change in interest rate (current is 15 days)
As of February 2010
3. Issuers can no longer raise the interest rate on an existing balance, unless the balance is more then 60 days late or a teaser rate expires.
4. Teasers rates must be in effect for at least six months.
5. Except for expiring teaser rates, the rate on new purchases cannot be hiked for the first year.
6. Payments in excess of the minimum owed must first be applied to the balance with the highest interest rate,and then to other balances in descending order.
7. Over limit fees may only be applied if the consumer opts in for approval on going over the credit limit.
8. Applicants under the age of 21 must have an adult co sign , or show proof of income for approval.
9. Issuers cannot offer free sign up gifts near college campuses.
10. Issuers can no longer practice "universal default" that is raise your rates if they learn you were late on another account.
11. Issuers must indicate on statements how long it will take to pay off a balance if the minimum payments are made.
12. In calculating finance charges, issuers cannot average in daily balances from the previous billing cycle.
As of August 2010
13. Cardholders assessed a penalty APR for late payments can reclaim the lower rate if they pay on time for six consecutive months.
This good news, but watch for credit card companies really trying to sock to you for as long as they can. In the long run this will be a great thing and should help people from heading down the road to bankruptcy.
Thursday, July 9, 2009
How Bad Is The Economy When a Debt Consolidation Co Files Bankruptcy?
"One of the unfortunate consequences is that you are left without the service you have paid for," its Web site no reads, directing current clients to reach out to their own attorneys.
How can you help others if you can't help yourself? Debt Relief USA, also known as No Debt USA, couldn't even help itself any longer. Last month the debt consolidation company filled for Chapter 11 bankruptcy protection. The company has not only filed for Chapter 11, it is completely shut down, leaving customer without help, while it files for protection with $5 million in total liabilities and $4.65 million in assets.
The company may be facing investigations from the Federal trade Commission and by the Attorneys General of several states according to their Website.
Isn't crazy when those who are there to help with your debt go out of business?
How can you help others if you can't help yourself? Debt Relief USA, also known as No Debt USA, couldn't even help itself any longer. Last month the debt consolidation company filled for Chapter 11 bankruptcy protection. The company has not only filed for Chapter 11, it is completely shut down, leaving customer without help, while it files for protection with $5 million in total liabilities and $4.65 million in assets.
The company may be facing investigations from the Federal trade Commission and by the Attorneys General of several states according to their Website.
Isn't crazy when those who are there to help with your debt go out of business?
Tuesday, July 7, 2009
How Do I Remove Incorrect Information From My Credit Report?
If you have reviewed your credit report and believe that some of the information it contains may be inaccurate, you can legally dispute it via mail or, for faster results, the Internet. Once notified of a mistake on your report, a credit bureau has thirty days to investigate and respond. If the information can't be confirmed, then the item or items should be removed.
For items that cannot be resolved online or that require copies of official paperwork or other supporting documents, use the sample Credit Report Dispute Letter below as a guide. Be sure to mail your letter and documents via Certified Mail for your records.
SAMPLE LETTER:
Your Name
Your Address
Your City, State Zip Code
Date
Name of Credit Reporting Agency
Dispute Department
Address
City, State Zip Code
Re: (Social Security Number & Date of Birth)
Dear Sir or Madam:
I am writing to dispute the following information in my file: (Identify disputed items by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) The items I am disputing have also been circled on the attached copy of the credit report I received.
This item is (inaccurate or incomplete) because (explain what is inaccurate or incomplete and why). I am requesting that the item be (deleted, changed, updated, etc.) to correct the information.
(If you are enclosing any documents, send copies only.)
Enclosed are copies of the following documents supporting my position: (List what you are enclosing, if applicable). I have also enclosed proof of my social security number and current address for your review. Please investigate and (delete or correct) the disputed item(s) as soon as possible, and inform me in writing of the outcome.
Thank you for your time and consideration,
Your name
For items that cannot be resolved online or that require copies of official paperwork or other supporting documents, use the sample Credit Report Dispute Letter below as a guide. Be sure to mail your letter and documents via Certified Mail for your records.
SAMPLE LETTER:
Your Name
Your Address
Your City, State Zip Code
Date
Name of Credit Reporting Agency
Dispute Department
Address
City, State Zip Code
Re: (Social Security Number & Date of Birth)
Dear Sir or Madam:
I am writing to dispute the following information in my file: (Identify disputed items by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) The items I am disputing have also been circled on the attached copy of the credit report I received.
This item is (inaccurate or incomplete) because (explain what is inaccurate or incomplete and why). I am requesting that the item be (deleted, changed, updated, etc.) to correct the information.
(If you are enclosing any documents, send copies only.)
Enclosed are copies of the following documents supporting my position: (List what you are enclosing, if applicable). I have also enclosed proof of my social security number and current address for your review. Please investigate and (delete or correct) the disputed item(s) as soon as possible, and inform me in writing of the outcome.
Thank you for your time and consideration,
Your name
Monday, July 6, 2009
Why Your Credit Score So Important
The first thing a potential creditor is going to look at when considering your credit application is your credit score. Unfortunately, looking at a credit report can be like judging a book by its cover. Your credit score directly impacts the credit and types loans such as: mortgages, car loans, credit cards, etc. that you apply for in the future. It can make difference with the current credit you have as well. bank are really checking these things these days. You could start to see your interest rates go up sky rate if your credit score starts to falter. Also, you may not qualify for a loan if your score is not high enough. The better your credit score is, the easier it is for you to obtain credit and it is more likely that the terms for that credit will be more favorable. A good credit score could reduce the amount of deposits required for utilities, have better insurance rates, and make it easier to get approved for an apartment.
Wednesday, June 24, 2009
How Can I Pay Off High Interest Credit Cards If I Don't have The Money?
Call the credit card company and renegotiate your interest rate. Many credit card companies would rather lower their interest rates or cut out annual fees or late charges than lose you as a customer. If you are paying high interest rates for credit cards, call each credit card company and threaten to switch to a competitor with a lower interest rate.If they won't lower your interest rate, make the change to another card, but watch out for balance transfer fees. Also, if the higher interest rate is bringing you to the brink, the credit card company may be more willing to negotiate with you if they think you are going to file for bankruptcy.
Wednesday, June 10, 2009
Chrysler and Fiat Get Hitched
"This is a very significant day...for the global automotive industry as a whole," said Sergio Marchionne, Fiat's chief executive who was named the CEO of Chrysler on Wednesday. "From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry."
From CNNMoney.com: Chrysler and Fiat make it official
Chrysler and Italian automaker Fiat on Wednesday officially signed a strategic alliance brokered by the U.S. government, one day after the Supreme Court cleared the path for the deal.
Fiat will initially take 20% stake in the company; its share can go up to 35% if it reaches certain fuel efficiency goals.
The new company will be called Chrysler Group, LLC, after former Chrysler LLC sold nearly all of its assets to the new firm.
I have been a fan of Chrysler since my parents gave me their Chrysler Cordoba as my first car when I was sixteen. I still currently drive two Chrysler products. They have always been great cars to me.
From CNNMoney.com: Chrysler and Fiat make it official
Chrysler and Italian automaker Fiat on Wednesday officially signed a strategic alliance brokered by the U.S. government, one day after the Supreme Court cleared the path for the deal.
Fiat will initially take 20% stake in the company; its share can go up to 35% if it reaches certain fuel efficiency goals.
The new company will be called Chrysler Group, LLC, after former Chrysler LLC sold nearly all of its assets to the new firm.
I have been a fan of Chrysler since my parents gave me their Chrysler Cordoba as my first car when I was sixteen. I still currently drive two Chrysler products. They have always been great cars to me.
Sunday, May 10, 2009
Can I Apply For A PLUS Loan If I Was Turned Down Before?
You sure can. If you were turned down for a Parental PLUS Loan in the past couple of years you should really try again. The emergency legislation, that we have discussed before, was passed in 2008 has made PLUS loans more affordable.
The legislation made it so parent could apply for a PLUS Loan, through December 31, 2009, so long as they are not more than 180 days delinquent on a mortgage payment for their primary residence or any medical bills. In the past the time limit was 90 days.
There is a FICO credit score check of sorts, but it is to show that there are no adverse items on your credit report. However, if you have filed bankruptcy in the past five years you are not eligible for a PLUS Loan. Previously you had to be current on all debts not just mortgage payments and medical bills. With economy's current state the legislation was passed to to give PLUS Loan Lenders more leeway in forgiving late debt payments. Another plus, no pun intended, if a parent dies, I guess that's not really a plus but the PLUS loan debt is forgiven. This is a benefit over private loans, as with private loans the debt still needs to be paid.
The legislation made it so parent could apply for a PLUS Loan, through December 31, 2009, so long as they are not more than 180 days delinquent on a mortgage payment for their primary residence or any medical bills. In the past the time limit was 90 days.
There is a FICO credit score check of sorts, but it is to show that there are no adverse items on your credit report. However, if you have filed bankruptcy in the past five years you are not eligible for a PLUS Loan. Previously you had to be current on all debts not just mortgage payments and medical bills. With economy's current state the legislation was passed to to give PLUS Loan Lenders more leeway in forgiving late debt payments. Another plus, no pun intended, if a parent dies, I guess that's not really a plus but the PLUS loan debt is forgiven. This is a benefit over private loans, as with private loans the debt still needs to be paid.
Saturday, April 18, 2009
Should I Take Out A 401K Loan To Pay Off My Credit Cards?
I have taken out 401k loans before but, I have taken them out to use as down payments for buying homes. All in all no matter what you take the 401k out for the concept is the same.
Unless you are not able to make your credit card payments at all and your FICO credit score is in jeopardy, this might not be a good idea right now. Be aware you can end up paying taxes twice on the money you borrow. If your FICO credit score has already gone bad due to late payments and your interest rate has sky rocketed to 30%,a 401K loan might be looking pretty good and you might think the tax penalty may be worth it.
The problem is we are in the middle of a recession. There is a possibility that you may loose your job. I have friends who have been with their company for years, In some cases over fifteen years, who have lost their job. No matter how much seniority you have you can still get laid off without any warning. If you were to be laid off and you have an outstanding 401k loan, you will have to repay the loan within a short period of time. Typically the time frame is 90 days. If you don't pay it off within that time frame your 401K loan will become a 401K withdrawal. This means you will have to pay tax on the entire amount. On top of that you will have a 10% early withdrawal penalty if you are under 55 when your service ends. Would you be able to pay back the 401K loan if that were to happen? You certainly wouldn't be able to take it from a credit card would you?
Something else to consider is your retirement. If you no longer have a your 401K, what else do you have for retirement? If retirement isn't on your mind it needs to be. If you can't pay your credit cards you may be thinking of bankruptcy. There are other options before things go that far, but the good thing with bankruptcy is(if there such a thing when it comes to bankruptcy)the money in your 401K or IRA is protected under bankruptcy law. You will not be required to payoff your credit card debts with your retirement savings. Don't blow your retirement on paying off your credit card debt.
Unless you are not able to make your credit card payments at all and your FICO credit score is in jeopardy, this might not be a good idea right now. Be aware you can end up paying taxes twice on the money you borrow. If your FICO credit score has already gone bad due to late payments and your interest rate has sky rocketed to 30%,a 401K loan might be looking pretty good and you might think the tax penalty may be worth it.
The problem is we are in the middle of a recession. There is a possibility that you may loose your job. I have friends who have been with their company for years, In some cases over fifteen years, who have lost their job. No matter how much seniority you have you can still get laid off without any warning. If you were to be laid off and you have an outstanding 401k loan, you will have to repay the loan within a short period of time. Typically the time frame is 90 days. If you don't pay it off within that time frame your 401K loan will become a 401K withdrawal. This means you will have to pay tax on the entire amount. On top of that you will have a 10% early withdrawal penalty if you are under 55 when your service ends. Would you be able to pay back the 401K loan if that were to happen? You certainly wouldn't be able to take it from a credit card would you?
Something else to consider is your retirement. If you no longer have a your 401K, what else do you have for retirement? If retirement isn't on your mind it needs to be. If you can't pay your credit cards you may be thinking of bankruptcy. There are other options before things go that far, but the good thing with bankruptcy is(if there such a thing when it comes to bankruptcy)the money in your 401K or IRA is protected under bankruptcy law. You will not be required to payoff your credit card debts with your retirement savings. Don't blow your retirement on paying off your credit card debt.
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