using retirement money ?

[AngelinaCatHub]

Bottom line, cash is king. Using your retirement to buy a house outright is probably not the best use of those funds. Real estate prices are not going up any time soon, so from a pure investment standpoint, this would be a poor use of funds. Plus, the penalties are simply not worth it.

Also, you should really think about your "housing needs". Do you really need a house or home ownership. Relative to renting, home ownership is always more expensive (the cost of upkeep etc) that in most cases can outweigh any tax advantage.

My thought, save the retirement funds, invest them wisely. One thing you haven't shared is why, exactly, your credit is bad. If that is the case, you may need BK now to help clean things up so you can buy a house using more conventional financing in a few years.

That's a good point. In fact, I don't think real estate has hit bottom yet. In a year or two, with all these repo houses, they may be able to purchase dimes on dollars for a house as these banks are going to find that the cost of keeping the houses up and paying taxes on them is not worth the trouble and start dumping them on the market. This will cause all real estate to take a dive and the circle begins. The OP then could cash a portion of his retirement in (if he insists) to purchase cash a house that today my be worth 100k, last year 250K and next year 45K. It is still the 250K house but deflation has caused a bargain. 'Hub

[keepmine]

One other thought. If you pay cash for a house and then file bk, you may have too much equity to exempt. You need to know how much equity your state exempts.

[SquareOne]

i live in florida. if i'm correct your equity in your home is 100% exempt if you have lived in the home for 3 years or more.

[StartingOver08]

i live in florida. if i'm correct your equity in your home is 100% exempt if you have lived in the home for 3 years or more.

Yes that is the one really great exemption we have here in Fl. But the rest of the exemptions in Fl are crummy! See them here:http://www.thebankruptcysite.org/exe...s/florida.html

So if you are considering BK, it might be a good idea to file first, then buy a home with cash for the long term plan. It's not possible for us to determine anything with accuracy because we don't know the details. The points brought up earlier regarding loss of income, taxes on your retirement withdrawal, medical issues are all valid concerns. KenShirley summed it up nicely - put together a plan.