Taking Money from 401K to Settle CC Debt? Is It Worth It? My Story!
Date: Thu, 03/11/2010 - 12:59
Owe Chase $22,000.
Settle at 35% $7700. (Seem great was even excited)!!!!
But wait!!!!
Knew I would need to borrow $10,000. From 401K
Since I was 55 last year I paid 20% instead of the 30%.
So received the check for around $8000.
But I count the whole $10,000. Since right away I lost 20%
Just did my taxes for 2009 and owe $1260. State & Federal combine (Due to the 1099r income 2009-401K early withdraw)
Estimate $2500. (could be more) Next year due to a 1099c credit card will issue.
Total $13,760. To settle cc debt
(Saved $8240) may end up being less
Seemed OK until I recently received a letter stating my car insurance will now increase due to my lower fico score.
Lesson learn; Staying away from credit cards, only pay with cash for a year now and it feels wonderful not to own cc debt!
The hidden costs of settlement. Sorry to hear that. Make su
The hidden costs of settlement. Sorry to hear that.
Make sure you verify that you were solvent on the day of the settlement, otherwise you might not owe taxes on the cancellation of debt (check with your CPA).
You can work out a reasonable payment plan with IRS. I did. Ju
You can work out a reasonable payment plan with IRS. I did. Just go to their website and do a search. The forms are there and you can file electronically. It's the price you pay for settlement, but at least you can sleep at night. I too and dealing with cash only. and it feels great!
You may want to shop around for an insurance company that doesn't use FICO score. If you've served in the armed forces or your father did, you might be eligible for insurance with USAA. My kids have their insurance with them because their step-father served. It's worth shopping around.
