Horrible Get Out of Debt Advice Lands Family In Hot Water (Part 2)

Horrible Get Out of Debt Advice Lands
Family In Hot Water With The IR$ Part (2)

Bad Get Out of Debt Advice - Borrow Against Your Life Insurance
Many debt counseling, debt settlement and debt elimination companies are advising their clients to borrow against their life insurance policies to pay off their debts. On the surface, this advice seems like a great idea. It’s your money. If you don’t pay it back, you’ll receive no calls from any debt collectors. The interest rates are low and you can take your time repaying the loan.

BUT! This move defeats the purpose of having life insurance in the first place! God forbid, if something happens… then what? Where will that family be? Unable to afford a funeral? Unable to pay off debts? When it comes to getting out of debt, remember the first rule of thumb: Never go in debt to get out of debt!

Bad Get Out of Debt Advice - Cash Out Your Savings
This is another one of those get out of debt suggestions that is mind boggling, especially in this economy. Let’s face reality; this is not a time you want to be without cash reserves. I just recently sat down and listened to a husband and wife work that have worked at a meat processing plant, 17 years and 9 years respectively. The plant inexplicably filed chapter 11 after an INS raid, and everyone has been out of work for two months now. The only thing that has saved this couple is their savings.

The only scenario I would say cash in some of your savings is if, you can do so and still have enough reserves to cover your current living expenses for a minimum of six months. If cashing out your savings means you’ll be broke, don’t do it! Not in this time of economic upheaval.

Bad Get Out of Debt Advice - Borrow From Your 401(k)
I covered this one earlier. There are just too many reasons why you should never borrow from your 401(k) to pay off your debts. Although the loan and interest will be repaid with after-tax dollars, when you withdraw money from the 401(k), the interest will be taxed again years later. Moreover, you must repay this loan within five years. If you leave your employment prior to full repayment, the outstanding balance becomes due and payable, you guessed it: IMMEDIATELY!

What’s the penalty if it's not repaid? That amount is treated as a distribution to you. Which means, you'll be taxed on that amount at ordinary rates. And if you happen to be under the age of 59.5, you will be assessed an additional 10% excise tax as a penalty for an early withdrawal of your retirement funds. Remember the first rule of thumb: Never go in debt to get out of debt!

Horrible Get Out of Debt Advice Lands Family In Hot Water (Part 1)
Some Get Out of Debt Advice is not only horrible, it just may land you in hot water like this family. They had a debt problem, sought professional help and ended up in worse condition.

Horrible Get Out of Debt Advice Lands Family In Hot Water (Part 2)
On the surface, the Debt Advice this family received seemed like it was on point, But in reality, it landed them in hot water with the IRS. Instead of their debt problem going away, it got worse, find out how they unwittingly received some very bad debt advice.

Horrible Get Out of Debt Advice Lands Family In Hot Water (Part 3)
After receiving terrible get out of debt advice, this family had to pay the piper. They had some hard decisions to make after realizing their debt problem got worse instead of getting better. Don't ever follow in their footsteps.

William Phillips brings a degree in economics and an unwavering passion to help fellow Americans come from under the clutches of debt. He believes that with the right debt advice or debt counseling, anyone can recover from the stresses of being overwhelmed with credit card bills and other debts.

For more information on this topic or any other issue related to getting out of debt, living debt free, debt management, debt relief, the Fair Debt Collection Practices Act and stopping debt collectors in their tracks, please visit www.DebtErasure.com

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◦	Horrible Get Out of Debt Advice Lands Family In Hot Water (Part 1)
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Horrible Get Out of Debt Advice LandsFamily In Hot Water With The IR$ Part (2)

Horrible Get Out of Debt Advice Lands
Family In Hot Water With The IR$ Part (2)