No. of Recommendations: 0
Has any one out there had any experience liquidating part of their nest egg in order to pay off overwhelming CC debts and avoid bankruptcy?

In my case, I have a nest egg worth a little over $250K, and I owe about $60K on CC's. I want to extract $100K from my nest egg, pay off the CC's with $60K, and use the $40K left to pay for taxes and fines.

I'm 34. I think I can recover from this hit on my nest egg if I start dumping as much as possible in 401K & Roth IRA after I get out from my high-cost CC debts.

I don't know if bankruptcy qualifies as a hardship for hardship distribution. Tax deffered accounts are almost impossible to touch, by design.

Borrowing against it is not a practical option in my case. I already owe $30K on it, and I can only borrow up to $50K, if they will let me.

My nest egg consists of the following 4 "eggs".
$50K in a 401K of deferred compsensation (my money)
$30K in 401K matching wich I'm fully vested in.
$50K in an I&I (Incentive & Investment) account. This money is bonuses that my employeer has paid me over the last 10 years.
$130K in ESOP stock

If I can not get a hardship distribution, can I get one if I get sued and a judgement is lodged against me? I don't want to go this route because judgements are forever.

I'm also wondering if I can even touch the 3 other "eggs" that are not my money. If I'm not mistaken, there are special rules about these funds because they didn't come out of my paycheck.

Any help would be appreciated. Thanks!
Print the post  

Announcements

UGC Disclosure Notice Regarding Credit Card Posts
Community board discussions about credit cards are not provided or commissioned by banks who may have advertising relationships with The Motley Fool. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement