The amusement begins:

After much pushing of the ‘0’ button I reached a human being. She says she doesn’t know how much they took, but no, they cannot take any more. My paycheck will be fine on Friday. I asked about making some sort of arrangement so I could get my husband’s medications and so forth. She transferred me to a manager.

He rolled off my name and someone else’s last 4 digits of SSN and didn’t pause long enough for me to say “That’s not right.” Then he said “Oh, there is a cease and desist code on your account, so I can’t talk to you.” I faxed in the “permission to talk to me” letter he asked for. (Bad idea? good idea? neutral?) and noted that despite this “code” they have called my 15 times on my cellular phone at work after the date that he acknowledged this communication.

Mr. Manager person is supposed to call me back at noon. Let’s see what story he cooks up now.

How long ago was that judgement?

They probably either a)added a bunch of fees and penalties, or b)just pulled all of it to make SURE they got enough. I don’t know how garnishment works. It’s possible that if you owed $1000 but only had $500 in the bank, a garnishment for $1000 would simply be refused.

My 401K account says that

there is no penalty if I get it paid back before April 15th. And no penalty if it is to avoid foreclosure? I was putting it into another bank account that they haven’t hit / found and then electronically posting it to the mortgage company.

The other, I’m trying to find out. It was from a lawyer – and I can’t reach a human being there to save my soul. I’ll try later today again. Trouble is, I’m at work and I need to work too!!!

For your immediate question

I’d say contact the mortgage company and tell them what happened. If you can afford to pay double next month, ask if you can do so. If you can only afford 1.5x payments for TWO months, that will get you caught up as well.

But like Sharon, I’d be worried if this was going to happen AGAIN. You really have to get that sorted before going forward…
Good luck!

Sorry to hear of your trials…

Suddenly and without warning has to be awful. However my first question would be subsequent garnishments to this account. Is the money they received enough to pay it off, or do you still owe more toward that end? I’m thinking in terms of repopulating this account… For instance could your husband’s pay check hit that account and it be gone again?

Now to your direct question about paying the mortgage. I believe the early penalty withdrawal is more like 35 or 40% depending upon your tax bracket. You’ll notice a nasty phrase “an additional” in the write up. I believe the companies withhold the tax bracket amount before disbursing it to you, so the money you get back might not be what you were expecting in its entirety.

You’re at the point now where desperate measures are called for though… I can see that. One wants to pay the mortgage but you have to take into account living until the end of the month, and get your other issues cleared up to keep you out of this vicious cycle. I think I would rather you borrow the money from someone than touch the 401K as its going to be an awful penalty versus paying someone back with interest.

Last but not least, you gotta do what you have to do, just make sure you’ve thought it ALL the way through. What will happen to your bank accounts and the ramifications for future deposits to that institution (it might not be enough to close one account and open another); the true withholding which will occur to your 401K…

On Friday, I went into our bank accounts

mid-day to discover that they had all been wiped out. Every penny I had set aside for the mortgage due on the 15th, anything we had for food, medicine, gas – it was all gone. Garnishment… No notice…

We have amazing friends who have brought over food, bought my husband’s meds, and given us gas money. So, the immediate necessities of keeping body and soul together are met. But the mortgage is due on the 15th….

I have about $8K in a personal 401K (rolled over from my last job). I could take the mortgage money out of it, but there would be a 10% penalty ($265 dollars) The late fee on the mortgage payment is about that much. Should I pull it out, suck up the loss, and bail us out?

I don’t think I could pull the mortgage together by the end of the month, and I’m afraid that if I did, I would just be behind for January (late fee) and continue that vicious cycle. My husband did not get his paycheck on Friday as he was supposed to, so that made it even harder.

Ya, after BS2, contribute

the maximum they will match, then take the difference between that percentage from 15% and put that into a ROTH, so it will be tax-free growth and no taxes taken out when you take it out at retirement.

Posted in tax

Thanks everyone for the reply

I will talk to my husband and probably contribute up to the match. And no, we would never consider this for our kids college, I just want to be able to save for it as my oldest is only 7.5years away from college.