Attn: Financial Advisors?
Question:
We live in Vegas and want to move and get an affordable home. We do not own real estate. She has $5k and I have $20k in debt, both accounts are in collections. The only asset we have is 55,000 in a retirement account.
I filed Chapter 7 in 99. My current income as insurance and financial advisor is too high for 7 here in Vegas. Right now it is around $45k but can get much higher.
A chapter 13 concerns me because of the 3 years of payments, its effect on my credit and potential to get another good job should we move, and we may not be able to get a house should we move.
I could liquidate the retirement and pay off the debt and have about $10k left after taxes and early withdrawl penalties. This would also include the tax liability for the $19k I took from my account last year.
As a financial advisor, I know that the withdrawl we took last year was stupid.
MOM is giving me 50K for home purchase.
BK or pay?
Answer:
Let me get this right. You are a financial advisor that filed bankruptcy and 99 and now are considering it again. In my opinion, you should have to disclose this to all of your customers. I would never consider going to you for financial advice. Sounds like you weren't raised to take responsibility for yourself especially if MOM is giving you 50k for a home. She doesn't realize that she is just enabling more bad behavior. Grow up, take some responsibility, and live on what you make. How are you going to feel when your child comes to you some day and says he/she is bankrupt for no reason other than irresponsibility.
If you are wanting to buy a home BK is the worse thing you can do, since it stays w/you for 7 to 10 years. I would call the companies and ask them what a total pay off would be if you could get the cash. Some will drop it down, to get at least something in money. I doesn't hurt to try.
Avoid the bankruptcy filing as much as possible. You would also be surprised to see how much of the $25k in collections that you can actually pay by making a deal with the creditors. Or arranging an alternative payment solution.
Also, don't liquidate the retirement plan. Not only are there tax consequences, but you will have to start saving for retirement from scratch. Re-starting a retirement savings program at 38 is tough enough. Perhaps you may consider reducing your retirement contributions until you can get your short-term credit situation in order. If you did something like that, you have to give yourself a short-term "fix-it" window, say 9-18 months.
Vegas seems like a good place to live and work, a growing national metropolis for sure. Good Luck!
You probably won't like this but people are in the positions they are in, partly because financial advisors don't tell them the hard truth.
You're a financial advisor? Okay, that said(I couldn't help it), have Mom(lucky you-what a Mom) pay the debts instead and use the rest for a downpayment! Don't use the retirement money(you already know this.) Do get an affordable home! But don't make the mistake of buying more than you can afford, like most people do. You can "move up" in a few years as your income grows. Don't get an adjustable loan because you think you'll make more money soon. Buy what you can afford with fixed payments that you can afford!
Now, stay out of debt-save now for retirement-compounding is the magic of growth-don't wait to save. 10 years of saving now is better than 25 years before retirement!
Even if you have only $10k for a downpayment, you'll be fine. Some are giving cash back in order to sell these days...good luck with everything-and resist that debt!
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