Good Money after Bad — Using Retirement Funds to Save an Underwater House

Good Money after Bad — Using Retirement Funds to Save an Underwater House

Buying a home is one of the proudest days in most people’s lives. Letting go of that home when things get tough can be a very difficult thing to do. But when the housing market dropped and the value of many homes plummeted, many people in the United States found themselves trapped in mortgages that they simply could not afford. In this situation, it can be tempting to use all the resources at your disposal to try and bail out your sinking mortgage. This can include tax deferred retirement savings like individual retirement accounts (IRAs) and 401(k)s.

There are several reasons why this is often a bad idea. First, you are going to have to retire some day and, depending on your age, it may be very difficult to restore your depleted savings before reaching retirement age. Second, most tax deferred retirement funds impose substantial penalties for early withdrawal, meaning that you lose up to 20 percent of your retirement savings simply by accessing the money early. Third, you have other alternatives that allow you to avoid these consequences.

Many mortgage lenders are willing to negotiate with borrowers who are struggling with home payments. Alternatively, some lenders may consent to a short sale which lets you to get out of the mortgage contract while allowing the lender to recoup some of its investment. Finally, bankruptcy can be an option. Many people do not realize that many retirement assets — including pension plans, deferred compensation plans and tax deferred accounts — are often exempt from creditors and the bankruptcy Trustee.

Categories

Reviews

From Our Clients
  • “We had great experiences with Mr. Roy. And all the folks here. Kevin and Chris and all the people were very kind and thorough in looking after our situation many years ago.”

    - Kathryn D.
  • “My wife Jane and I were experiencing a very difficult financial situation. Debts, foreclosure, repossession's to name a few. We were referred to Lansing Roy and it was one of the best decisions we ...”

    - Douglas P.
  • “Smartest man on the block!!! A wonderful firm!!! An excellent choice!!! Expand, expand, expand”

    - Brenda B.
  • “Filing for bankruptcy is, obviously, not a pleasant experience. The process, from making the decision, through the final disposition, is emotional and stressful. Our situation was complicated and took ...”

    - Kerry M.
  • “All around great to work with!! This firm is excellent!! I was referred by a family friend and I could not believe the level of service.”

    - Satisfied Client
/

How We're Different

  • Free In-Office Bankruptcy Workshop
  • Well-Versed in Bankruptcy Law
  • Solid Reputation in the Industry
  • Caring & Personable Service
  • Non-judgmental Approach to Each Case

Contact Us

Fill out this form to request a free consultation.
  • Please enter your first name.
  • Please enter your last name.
  • Please enter your phone number.
    This isn't a valid phone number.
  • Please enter your email address.
    This isn't a valid email address.
  • Please make a selection.
  • Please enter a message.