Question Job Loss, underwater mortgage, SCHOOL, and 401K

[cin]

That's a lot in my title! I will try to be brief, but it's doubtful I will succeed. I am a 53 year old female, Massachusetts, and in June I lost the job I had for close to 30 years. I'm screwed. I bought a condo 5.5 years ago, spent over 100K in interest and condo fees so far, still owe 175K and the one next to me is UNSOLD for 105K. So the condo has to go -- I have to deal with the emotional aspect of that and cry every morning. Okay back to logistics ... I settled on a personal injury case (which is untaxed) .. and working on making that money disappear. I am paid on my mortgage through the end of August -- paid my condo fee through the end of the year. Mortgage, health and utilities are about 2K month. Unemployment, WHEN it comes, will be about 1500.

My GOAL and HOPE is to go to a one-year school program in September 2013. An entire year off. So to get there, I can't claim bankruptcy until then, AND I have to justify the money I use for tuition (15K). I have a lawsuit against my former employee that "might" get me about 15K which I can again try to "disappear" half of that. My thought is to take the 15K from my 401 K around next June to pay for school -- so it won't look bad to the trustees. And THEN file around October (2013). 15K today will be worth a hell of a lot more than 30K in 15 years. I don't have a degree, worked my way up over 30 years, and starting salaries in my field are only about 30K versus the 57K I was making.

I'd like to get your thoughts on this plan. It's not going to be an easy road ... If I take the 30K from my retirement, I will still have 100K left. The most important thing to me is to be able to SURVIVE until retirement. The field I am going into can be transferable to any other place (versus an office), and there is virtually no age discrimination in it.

Thanks for any help and ideas ... I just want to see if I am starting out on the right path here. My job loss was June 1, and my head has been spinning since.

[cin]

When I said "disappear" as far as money goes, I just meant paying bills and using cash instead of my credit card as much as possible from now on. CC is only 6,200 and I don't want to use it too much in case it looks bad a year down the road.

[kawh]

My first reaction when I read your post was 'wow, that was me, ten years ago.' Don't use your 401k to pay for tuition, and don't do any financial biggie right now ----- because, if the job loss happened just last month you still are in a state of shock. It does sound like you are doing sensible stuff so far, but hold off on the 401k. Just fyi, I paid for tuition for over a year, with my savings that were not 401k. But if I had not had enough savings, I would have used my credit cards to live and paid tuition out of unemployment or whatever other funds I could find. Your 401k will be exempt in bk, of course.

[AngelinaCat]

Hi cin, welcome to the forum!

You certainly do have a lot on your plate. But I have to IMPLORE you to do everything you can to avoid raiding your 401k. You are now about the age I was when my 'Hub and I decided to take a loan from his 401k. He is eight years older than I so was almost at retirement age. That loan never got paid back--as we were trying to rob from Peter to pay Paul. Then we decided to liquidate it entirely, along with some other assets, trying to stave off the inevitability of filing. Then job losses, medical bills and legal problems snowballed and we had to file.

When we did, we learned that the 401k would have been an exempt asset in Ch7. We are now 3 years post discharge, and having some income from that 401k would be most welcome today. We only have 'Hub's social security, his paltry pension, and my PT jobs as income. I am too old now to be seriously considered for FT employment.

I am having to go for now, but I will return to this later.

Good wishes.

[cin]

Thanks for responding Kawh. I don't have enough in savings to come up with 15K for school. School will be FULL TIME from Sept 2013 to July 2014. IF I can figure out how to pay my mortgage for a year, I will take out from the 401K in June of NEXT year to pay for school. This is the only way I can do it. If I am working full-time, and keep that money in my retirement fund, I will be financially screwed for the next two decades. Plus at my age, you wouldn't believe the LEGAL discrimination out there. I am 53, and they said my position was "eliminated", and posted it the next ay for 25K less. And it's legal .... because of the salary and title change, it WAS eliminated, legally. I am trying to fight it and hope they will pay me a little bit to get rid of me ... I don't expect the future to look any better when a 25 year old will take 25K less than me and not need to use the benefits ..... Age discrimination is a huge factor for me.

There's a lot of "ifs" .. IF I get more from my ex employer, IF I can collect unemployment for more than 30 weeks ..... I love that this site is here and I can ask you folks questions and figure out if I can do this .... The 401 K is the ONLY way I can figure out to pay for school AND be able to justify to the trustees 4 months later .... I HOPE that would be possible and not a trustee issue. My credit card debt is low, my car is paid (12 years old), so my only debt will be cc and mortgage. WOULD a 401K withdrawal be looked at as fraud??

[Pjmax]

So sorry for your job loss. I'm sure the wise experts will be along soon. I am considering going back to finish my degree. I have the time now, but no money. Thought it would be a bucket-list thing to do for myself during retirement. Now it's a future employment consideration. Have you looked into tuition waivers in your state? Some states offer 're-training' (ya gotta love that term) assistance while on unemployment. It's worth researching.

[cin]

Hi Angelina, thank you for responding. I did the figures and taking out 30K would actually leave me with 120K in my retirement account (I couldn't bear to write "401K" after 30K and 120K, lol). I just see NO future for me in an office -- and a slow slide into poverty versus (hopefully) getting a license in a different field and having a future and (fingers crossed) another small condo some day -- well I have to go for it if I can .... I can see me working full time in an office, trying to pay rent, and ending up where I am today ... rinse, and repeat. Oh and my 12 year old car will not be getting any younger. And the office jobs are in Boston, a 240/month train pass -- Something has to change --

[Pjmax]

Oh, by the way Cin, I'm 62, so I empathize with your situation. I've been unemployed for a year and a half now and the only jobs I come close to being interested in are way out of commuting distance (like I could afford to move, let alone live in a large city), and would most likely be entry-level. I wouldn't mind the entry-level job if I could convince an employer they could hire experience for the same price as a newbie. But there is nothing close enough, so I'm off to 're-train' myself, somehow. At least I qualify for near-free tuition at the community college. There are a lot of states that offer free tuition for older students, not mine unfortunately.

[kawh]

Yeah, I am quite familiar with the age discrimination thing, too. I hope there are plenty of confirmed opportunities within the field you are planning for after school. I made a mistake with my special one year program, it was overhyped by the schools and colleges, now I find we're sort of a dime a dozen right now.

But nevermind that, just continue to be cautious and keep an open mind. If you do have low cc debt and an underwater mortgage, what would happen if you just stopped paying the mortgage and stayed until they came for you? Just tossing out ideas here. It does seem a shame to use up possible money to live on, by continuing to pay a mortgage for another year. Good luck!

[cin]

PJ, yes we are certainly in the same boat! I want to get an LPN license. I worked at a medical university so the terminology will be a breeze ... and I can start studying some of the basics between now and September. There are LPN programs at many community colleges, and that's what I plan to do. You might want to look into that yourself, if you have any interest. I have heard that the "medical assistant" and other programs like that have been taken by so many (probably younger) women that the pay stinks since there are so many of them out there. LPN jobs are projected to increase BIG TIME in the future, and like I said, minimal job discrimination. Landing the first job is the problem .... but one thing at a time. Too bad you didn't live closer to Massachusetts ... we could have a cup of coffee and ***** about the rich a-holes on top, screwing the little people.

One thing that hurts is so many of my so-called "friends" have NOT reached out to me during these last two months. It is still so raw and painful right now, and that just hurts.

[cin]

Kawh, I definitely understand you got into a program and the market became saturated. That's why I'm going to try to get my LPN license. (see above post). Oh and I DO plan to live here until they toss me out -- once I START school. That's the plan .. IF I get some settlement from my job, and IF I take money from my 401 in 8 or 9 months from now. It seems "possible" ... but damn it's a freaking "shaky" plan ..... So sorry school didn't work out. Oh and I did consult with a bk lawyer and he said the best way to get the most time in the condo is to start with a Chapter 13, switch to a 7 (or vice versa) -- and in Massachusetts he said I could get up to 15 months here. Of course that could change .... Once in school, I stop paying and I can at least STUDY in my own home. The school is ten minutes from here.

[Pjmax]

One thing that hurts is so many of my so-called "friends" have NOT reached out to me during these last two months. It is still so raw and painful right now, and that just hurts.

It's times like these, unfortunately, that you find out who your real friends are. Don't give it much thought. Those that have dropped off the radar aren't worth it.

[kawh]

I made so many mistakes with my retirement account (used to be a 401k which I in my infinite wisdom rolled over), I don't claim any special expertise with financial advice. However, in the realm of wanna-be nursing, I am an expert of sorts. Please consider, and maybe you already are, doing some work as a CNA (what they used to call 'nurse's aide') before you definitely fork over your money to the school. Some schools actually require this experience, so you will be ahead of your game if you're already there.

[AngelinaCat]

Hi cin. I merged your two threads into one and put it into the 'General Bankruptcy Talk' B, since you are actually in the 'what am I going to do next?' stage.

Both threads were getting replies, and it is too confusing to follow two separate threads on the same subject.

[keepmine]

I'd not touch that 401K in any shape form or fashion.
Instead, since you will eventually surrender your home, I just default right now and start banking those mortgage payments and use that for mortgage payments. Any payments made on something that'll be discharged in bk is just money down a rathole.