Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 09-02-2012, 10:31 PM   #21
Confused about dryer sheets
 
Join Date: Aug 2012
Location: Elkton
Posts: 8
Quote:
Originally Posted by BLS53

I think a few of the moral high ground members, saw "personal bankruptcy" in his post, and proceeded to run him off.

Elsewhere on the boards, the benefit of marijuana usage was being discussed.
I did not default on these loans since they are with my current employer. I had not thought of defaulting though. maybe I should think about defaulting in order to increase take home pay.
__________________

__________________
Benjamin132 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-02-2012, 10:37 PM   #22
Confused about dryer sheets
 
Join Date: Aug 2012
Location: Elkton
Posts: 8
Quote:
Originally Posted by sunrise

Yep, those payroll tax obligations will just keep growing. Interest and penalties are high. Get in touch with both the IRS and the state to work out an IPA / payment plan (and possibly forgive a bit of the back taxes). I have always heard it is better to keep in touch rather then avoid them.
Talking with state on the amount due. I am securing a discounted number. It is working by doing this. I have sent correspondence challenging the amount they say is due. I have secured a hearing too in order to show my evidence of payments made.

IRS is waiting for now. I have made payments by them holding my refund check. They have also dropped all penalties and interest charged to the business. I am preparing to make an OIC when my BK clears.
__________________

__________________
Benjamin132 is offline   Reply With Quote
Old 09-02-2012, 10:41 PM   #23
Confused about dryer sheets
 
Join Date: Aug 2012
Location: Elkton
Posts: 8
Quote:
Originally Posted by lemming
I'm surprised the 401k loan didn't come due when the business failed. Or since you were the owner/admin maybe you didn't call it on yourself?
Could you default on that loan? If your income is lower now the tax might not be as high as your credit card interest.
I will see if I can default on those loans to use that cash to pay others. The loan payments on 3 notes total over $1,200 per month. That is an idea I had not thought of.
__________________
Benjamin132 is offline   Reply With Quote
Old 09-03-2012, 01:11 AM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 5,899
Benjamin,

I am sympathetic. You have really taken it on the chin, but at least you have a realistic goal (retirement in 22).

I agree with those who advise reducing your asking price for real estate, if you really want to sell. People have been sitting on RE since 2008 since they refuse to "take less than my property is worth." I bid a "comparables-value" offer, not an insulting lowball, on one such home recently, and was turned down flat. The owners would not negotiate, but they are apparently rich, and can afford to wait. Can you?

As for LBYM, you ain't seen nothing till you've read some of the posts from the frugalistas on this forum - and elsewhere on the Internet. I mean, we have folks who will cut an industrial -size toilet paper roll in two, horizontally, with a hacksaw! Just google "Frugal living" and the possibilities are endless.

Good luck.

Amethyst
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success to be able to spend your life in your own way. Christopher Morley.
Amethyst is offline   Reply With Quote
Old 09-04-2012, 12:51 PM   #25
Dryer sheet aficionado
 
Join Date: Aug 2005
Location: New York City
Posts: 32
Benjamain, I sympathize with your situation and wish you the best. You should also seek professional advice so that you can consider all of your options during and post BK. Having said that, I would urge you to reconsider defaulting on the 401(k) loan. You should confirm this but I think doing so may cause it to be treated as a distribution from your 401(k), resulting in taxable income and a 10% penalty even if it is considered a hardship withdrawal.

In addition, you need to think of your financial stability first, so paying your 401(k) loan will increase your protected assets. This is likely an unpopular view, but I don't think there is a moral obligation to pay everything so that you are destitute. In the business world, BK and debt forgiveness are merely strategic options, although I don't condone the pension raiding that was used so often in the 80s. Personal loans to friends and family I think you should honor since they extended such loans when no one else presumably would. Good luck.
__________________
Buddha44 is offline   Reply With Quote
Old 09-04-2012, 03:45 PM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,287
Quote:
Originally Posted by Buddha44 View Post
Benjamain, I sympathize with your situation and wish you the best. You should also seek professional advice so that you can consider all of your options during and post BK. Having said that, I would urge you to reconsider defaulting on the 401(k) loan. You should confirm this but I think doing so may cause it to be treated as a distribution from your 401(k), resulting in taxable income and a 10% penalty even if it is considered a hardship withdrawal.

In addition, you need to think of your financial stability first, so paying your 401(k) loan will increase your protected assets. This is likely an unpopular view, but I don't think there is a moral obligation to pay everything so that you are destitute. In the business world, BK and debt forgiveness are merely strategic options, although I don't condone the pension raiding that was used so often in the 80s. Personal loans to friends and family I think you should honor since they extended such loans when no one else presumably would. Good luck.


The defaulted loan WOULD be considered a distribution that would create the 10% penalty.... if you need more cash flow, I would suggest refinancing them and extend what you owe to 5 years.... I would not suggest default....
__________________
Texas Proud is offline   Reply With Quote
Old 09-04-2012, 04:03 PM   #27
Confused about dryer sheets
 
Join Date: Aug 2012
Location: Elkton
Posts: 8
Quote:
Originally Posted by Texas Proud

The defaulted loan WOULD be considered a distribution that would create the 10% penalty.... if you need more cash flow, I would suggest refinancing them and extend what you owe to 5 years.... I would not suggest default....
Thanks for this comment. There are three loans totaling $25K. They are now down to two years payments remaining on them. Refinancing them will require I front the cash and pay them all off and take a new single note on the balance to get the cash back. Not feasible today of course. In the event I take the penalty on the distribution that would be costly but would free up the monthly cash to work with. I would be prevented from making any 401K contributions for 6 months. I learned this when I took a $9k hardship withdrawal in 2011 to pay legal fees for bankruptcy proceeding.
__________________
Benjamin132 is offline   Reply With Quote
Old 09-04-2012, 05:22 PM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,287
Quote:
Originally Posted by Benjamin132 View Post
Thanks for this comment. There are three loans totaling $25K. They are now down to two years payments remaining on them. Refinancing them will require I front the cash and pay them all off and take a new single note on the balance to get the cash back. Not feasible today of course. In the event I take the penalty on the distribution that would be costly but would free up the monthly cash to work with. I would be prevented from making any 401K contributions for 6 months. I learned this when I took a $9k hardship withdrawal in 2011 to pay legal fees for bankruptcy proceeding.

Are you sure you have to front the money Maybe it is because I am the one who did the paperwork for the company, but for my coworkers they can refinance without fronting the money.....

Another option if you have more borrowing ability (probably not, just throwing it out).... is to do another loan for 5 years and then pay off a short term.... as they say, rinse and repeat until you get all your loans to 5 years....

Note, this might cost you some.... we make the employee pay the $25 fee for taking out a new loan....


Also, is there room on your CCs A month or two of high interest so you can spread out the payments to get current cash flow might be worth it.... you would have to determine the cost/benefits to you....

Or, is there a family member willing to front it for a month If you explain what you are doing and why.... they might be more willing to help than just loaning money not knowing when they will get it back....
__________________

__________________
Texas Proud is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 10:12 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.