If at all possible, I would recommend that debtors not liquidate their retirement plans in an attempt to pay off their debts.
Anaheim, CA (Vocus) September 2, 2010
A record number of people are tapping into their 401(k) plans in an effort to pay off their debts.
With unemployment still high and thousands of consumers with large amounts of debt, Americans are turning to their 401(k)s. Fidelity Investments is the nation’s number one provider of workplace retirement savings plans. In a recent report they cited an increase in the use of hardship withdrawals by participants.
Morgan Drexen, Inc. works with attorneys throughout America, who represent consumers in debt. This attorney based debt resolution program is a big success. However, the attorneys supported by Morgan Drexen say tapping into any saving plan is a bad idea especially the 40199(k).
Consumers are using their 401(k) for critical living expenses. The fear amongst economists is that this may jeopardize their future retirement. However, it is America’s declining economy that has forced many people into borrowing from their 401(k) accounts.
According to the Fidelity report, the average 401(k) account balance at the end of the second quarter was $61,800. That’s up 15% from the same time last year, but down from the end of the first quarter of 2010.
For many people, their 401(k) is the closest thing they have to savings. That was certainly the case for Stephanie Silver.
Stephanie entered into a debt resolution program with the Howard | Nassiri Law Firm. Morgan Drexen supports the Howard | Nassiri Law Firm.
Morgan Drexen provides automated software solutions and full back office support to attorneys throughout the nation. Stephanie admits that she entered the program after tapping into her 401(k).
Stephanie, an Oregon resident accrued over $20,000 in debt, due to relocating for a new job. Her 401(k) was her only form of savings, “We took $15,000 out of our 401(k) we had to pay several thousand in fees. I was working for my company ten years. I only have $1000 in my 401(k).”
Stephanie also admits, “I am not sure I will ever get back to where I was with my 401(k). I thought about bankruptcy but I really didn’t want to do that so I decided to take a chance on this program. I’m debt free now and I can hardly believe it.”
Debt resolution, for thousands of Americans has been a great success. Vincent Howard of the Howard | Nassiri Law Firm says, “If at all possible, I would recommend that debtors not liquidate their retirement plans in an attempt to pay off their debts.”
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