Options for Dealing With Overwhelming Debt
Many New Jersey residents know what it is like to face overwhelming debt. Whether it comes from credit cards, medical bills, job loss or something else, facing insurmountable debt leaves many people worrying about the future. How will you get out of this debt? What happens if a creditor decides to sue you? Could you end up losing your home?
These are all valid questions when you are struggling with debt you cannot pay off. And when unimaginable scenarios like losing your home have become reality, it is easy to look for a quick way out. The quick way out, however, is not always the best way to get things back on track.
Turning to Retirement Accounts to Pay Off Debt
When considering how to pay off debt, some people turn to their retirement accounts. At this point, it may be the only substantial amount of money they have left, and the withdrawal fees may not seem so bad if you can avoid trouble with creditors. Withdrawing funds from your 401(k) to pay down credit card debt or medical bills, however, is rarely a good idea.
Bankruptcy Can Be the Best Option
In a situation like this, bankruptcy would likely be your best option. Why? Because your retirement account is protected from a bankruptcy filing, meaning creditors cannot access it.
Filing for bankruptcy can be a scary thought, but for many people it provides an attainable path to freedom from overwhelming debt. And if you avoid withdrawing funds from your 401(k), you can emerge from bankruptcy feeling like you have a stable future ahead of you.
For advice with your debt situation, contact one of our personal bankruptcy attorneys today.
Source: CNBC, "Suze Orman: Don't put your retirement on a credit card"