Do you sometimes feel a sense of panic setting in when you see your credit card bills begin to spiral out of control? When you get that feeling of being trapped by debt, your thoughts may turn to cashing in your retirement money or borrowing on your 401K to get enough money to bring down your debt levels.

This could be a huge gamble. If you win, you could eliminate your debt entirely. But if you lose, there goes your protection for your senior years and maybe the little nest egg you wanted to pass along to the kids as an inheritance.

Hitting the 401K to pay off your credit card debt is a bad idea for a lot of reasons. The most obvious one is that your retirement money is tax deferred. So when you tucked it away, you didn’t pay any taxes on it, and you won’t have to pay taxes on it until you take it out. On top of that, the money is intended to stay in reserve until you hit retirement age so in most cases, if you take it out early, there is a penalty to pay. Continue Reading »

With so many people today finding themselves in financial trouble, the rate of bankruptcy has been on the rise.

The main purpose of bankruptcy is to give honest debtors a fresh start, clearing most debts and discharging debtors from legal obligations and providing the courts with non-exempt assets to be distributed among the creditors.

Types of Bankruptcy

While there are many types of bankruptcy out there, the most commonplace are chapter 7 bankruptcies and chapter 13 bankruptcies of the bankruptcy code. Continue Reading »