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No. of Recommendations: 4
I have approx $20k in CC debt. One of the cards has approx $15k on it and the minimum payments have become overwhelming.

Current situation:
- unemployed (no unemployment benefits)
- minuscule savings and checking account
- hopefully will have new job early/mid January
- age 30

How long have you been unemployed? How realistic is it that you will have a job in early/mid January? "Hopefully" doesn't sound all that likely. Have you signed up with temp agencies? Do you have skills that you could do freelance work from sites like Upwork?

How are you paying your living expenses now? If you are using the cards to do so, if you miss payments, you are going to be cutting off your source for your living expenses.

What are your minimum payments? What debts do you have other than the credit cards?

1) 401k Withdraw- Withdraw from old 401k account(approx $10k in it) and face the penalties? Should have somewhere around $6k after tax and withdrawl fee.

DO NOT do this. The penalties and taxes of ~40% are far higher than the penalty rates on your credit cards.

Any advice on how to minimize tax/penalty damage if I withdraw in 2016 vs. 2017? I should be in lowest tax bracket for 2016.

What will be your income for 2016? What's your filing status? The 'lowest' tax bracket would be 0%, and would require you to have very little income - basically your standard deduction, plus your exemption amount, so saying you should be in the 'lowest' tax bracket probably isn't correct.

(Could use $4-5k of the withdraw to take a chunk of CC debt out and have the rest for bills/living expenses?)
(I also have rollover IRA with approx $1k in it)
I figure that I could use $4-5k to help lower CC payments/interest, improve credit score over time and apply for new CC's with low interest balance transfer deals or a personal loan with equivalent or favorable interest rate.

Huh? You're going to have $6k after taxes and penalties - maybe $7k if you toss in the IRA. If you apply $4k - $5k to your $20k in debt to 'lower' the minimum payments, you may cut the payments by 20% - 25%. How long will the extra $1k - $3k pay even the new minimum payments, much less help pay living expenses?

(Other retirement type investments I have are rental properties that I will not touch, and will be counting on to snowball for retirement income)

If you have rental properties, can you sell one or more? I know you don't want to, but especially if they aren't cash flow positive, you may need to bite the bullet.

2) Debt Relief Program- Spoke with a couple companies and they've approximated monthly payments which are lower than what I'm paying now between 2 CC's. (I'm hesitant to do these because I know my credit score which will take a major hit due to the CC accounts being cancelled and requirement by debt relief company to miss payments in order to renegotiate payments/rates). My credit score is approx (640-690) depending on the rating agency.

DO NOT sign up for any 'debt relief' program that requires you to miss payments in order to implement.

3) Miss some CC payments- In order to "get by" for now, I could just miss some payments or pay less than minimum. My credit score will take a hit, but it is the only option I have.

Have you talked to your credit card companies? They may let you skip some payments, lower your minimum payment for a few months, or set up a payment plan with a lower payment for you.

4) Try to negotiate debt relief myself- I wouldn't know where to start on this. Any chance the institutions will allow lower than minimum payments without penalty for my temporary hardship? From what I've read, you typically need to miss a handful of payments before they will even consider your case.

Yes, it's possible. They don't want you to default, either. As mentioned above, they may be willing to lower your payment or let you miss some payments.

They also may not be willing to work with you. If that's the case, then I would suggest seeking out a credit counseling agency that's accredited by the NFCC (National Foundation for Credit Counseling). You can find their website at


Probably wouldn't be worth it for just $20k in credit card debt, especially if you don't have any income to protect.

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