Is It Advisable to Use Your Retirement Funds to Pay Off Debts? A disturbing trend that has been recorded by a recent report from ‘Fidelity’ depicts that a growing number of people are making hardship withdrawals from their retirement accounts to pay off their various outstanding. This saddening and frustrating fact proves the increasing helplessness of people to pay their debts, in spite of a gamut of debt relief plans and debt cure options like debt settlement, debt consolidation etc. This phenomenon is not only breaking down the future financial assurance of people, but is also enabling the creditors to reach and enjoy funds that they otherwise cannot claim or touch. Economic disasters like recessions, bankruptcies, salary decreases, unemployment, wage garnishments, crash of housing market etc are leading many people to liquidate or borrow from their retirement funds to pay off debts partially and totally. According to debt lawyers and financial experts, it is not at all advisable to take out money from one’s retirement funds; or rather one should avoid it by any means, by opting for other alternatives to pay off their outstanding bills, loans or debts. In most states of US, retirement accounts is exempted if someone files for bankruptcy, which means the creditors, collection agencies or court of law cannot sue the debtor for keeping these funds, which acts as a valuable asset for the debtor in later life and future. Thus one should always consider all other substitute methods of paying off debts, before considering using of their retirement funds, which should be a last resort to them. According to bankruptcy and debt attorneys, one should keep two points in mind while dealing with debts, which may provoke him/her to use the retirement accounts: •
In case you are facing difficulties to make ends meet, it is better to stop paying for the unsecured debts like credit card and medical bills and to file for bankruptcy against these, rather than touching and discharging your retirement funds to pay these off. One should stop paying for the secured debts in case the assets are charging you more than their worth in the market. For example one can think about selling one’s house or car to get rid of the unnecessary debt payments against these, when the debtor can mange with a smaller home or a much economic vehicle than the former ones.
Remember the fact that your retirement money is an imperative and requisite source of financial reliance for your future, which one should not sacrifice for anything.
Published on Dec 2, 2010
Thus one should always consider all other substitute methods of paying off debts, before considering using of their retirement funds, which...