Hi,
I'm a regular visitor to this site and have used it extensively to rebuild my own credit after school.
My family and I were just made aware of my brothers current credit situation and its not good.
Income approx 2600 a month, bills approx 2400 a month. 3 high interest credit card minimums are barely being made. He borrowed from his 401k last year to pay down some cards and bought himself a year but now all the cards are charged up again and he wants to borrow again to pay off the 1st 401k loan to free up and get another larger loan to payoff the cards again.
On paper, this plan would work and he could pay off the smaller loan and cc balances in 36 months if he is able to stick to a very tight budget. But looking over all the data I am wondering if it wouldn't be better for him to file bankruptcy rather than take a loan against his 401k. He has no assets aside from the 45k 401k. He lives in an apt, drives a used car with a small payment. He makes 45k a year and has 37k in unsecured credit card debt. Its so bad he's contemplating quitting his job of 10 yrs so he can pull his retirement out, pay off credit cards and start fresh. But we all know that's not the best idea.
I am not sure what advice to give him. I can help him budget and his asking for help is a major step, I am just not sure helping him get a large 401k loan is the best thing for him. I am actively googling bankruptcy information but I am very confused. I read the faq's on this site and it left me even more confused.
