Consequence of CC Defaults for the Unemployed
Date: Mon, 08/22/2011 - 12:22
I got laid off recently. I do not have any savings except for a few thousand dollars that I need to use for my living expenses for a couple of months.
I have 50K credit card debt. I have not been paying for a few months and they are willing to settle. However, I will need to cash out from my 401K if I need to settle. I have more than enough to pay from 401K if I would cash out.
My question is what would a CC company can do if I do not pay or not settle. The only thing I can think about is they will charge off the debt after 6 months to a collection agency and they will call me to get money.
They might sue me but I do not have a job and there is no money in my bank account.
As far as I know IRA and 401K are secure and they can not levy on them.
Why should I pay in this case? Thanks. JHH.
Unless you have equity in real estate to protect, I would NOT pa
Unless you have equity in real estate to protect, I would NOT pay from your 401K, you will incur a 10% penalty Even a 401k is protected in bankruptcy.
If you do not pay, they can sue and probably win, if they win they will get a judgement on you and garnish your wages, sieze bank accounts, cars boats,, and place an unsecured lien on your home.
I am far from an expert but am in a similar boat as you and have been researching for months, nothing else to do, Im unemployed as well.
Thanks
Thanks for your info.
I do not own any real estates. I have two cars. One is underwater. Another one is 11 years old. Practically no value.
No money in the bank. No real estates. No expensive cars or boats. BUT, plenty of cash in 401K.
I was going to cash out to settle the entire accounts. But why should I ? I do not own anything. Even if they collect judgement on me, what could they do?
Unless I get my job back but it seems it is very difficult to find a job out there.
Thank again.
don't cash it!
Keep your retirement! I'm also not an expert, but I've met with a BK attorney and that was the advice he gave. As others have said, your retirement is safe, no judgement can touch it, even a bk won't touch it.
My own experience suggests that you can postpone the nasty collectors for a long time if you keep talking to the original creditors (except citi/home depot, who sent me to an attorney at 60 days). For the most part, they are pleasant, often the only reason the person on the other end of the line is working in collections is because otherwise they'd be unemployed, too :(
If you get a job, then you can start making payments again, or else work out a settlement once your secure that your living expenses are covered.
Remember, first things first. Take care of yourself and your family before the bill collectors. Good luck to you!
I agree...do not touch your 401k. File bankruptcy if you have t
I agree...do not touch your 401k. File bankruptcy if you have to but leave your retirement alone.
