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Should I try and contact my creditors to work out a payment plan or cash out my IRA to pay down the debtI am 50 and self employed and watching my work diminish and may be w/o income soon and looking for work. I have much debt but have an IRA and want to know whether it is better (if I can't pay my bills) to consider debt settlement or withdrawing money from IRA to pay down debts. The IRA has only around $20000 in it. Attorney answers (1)
Reputation Level 15
Answered over 3 years ago.
Divorce / Separation Lawyer in Quincy, MA.
You should try as hard as you can to settle or pay off the debt completly and NOT take out money from your IRA prematurely. When you take out money from your IRA, you will be subject to penalty and taxes. In addition, if you were to get into a situation where you need to file for bankruptcy, money in a retirement account is safe from bankruptcy whereas if you take the money out, it might have to be used to pay off creditors in a bankruptcy.
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