Yeah, I know. I can’t except by using my most powerful tool, being poor, which I’m going to do anyway. My wife, though, thinks there’s some magical Thing THEY Don’t Want Us to Know About, and I should talk to an accountant or tax lawyer before going any further. :rolleyes: I’m not going to take time off from work to pay some guy to tell me what I already know, but I want to do some collaborative thinking wit’chall just in case she’s right. Here’s my situation in a coconut shell:
I worked for a company for ten years and got vested in its pension plan. I’m a big, fat guy with asthma and balance problems and never expected to live until retirement, so when they sent me yearly letters saying how much I’ll get monthly when I turn 65 I kinda ignored it as fantasy money, especially when it started out at about $125. Big whoop.
Since that job I’ve seen some good times and some bad times, and this is one of the bad times. I’m massively under-employed and my wife is unemployed. We owe a lot of money, from back real estate taxes to credit cards to medical bills, and have a leaking roof and a busted furnace and stove. When I got a letter from my former employer telling me I could cash out my pension I thought, “How lovely! We don’t have to freeze next winter.” I was figuring about ten or fifteen grand. Uncle Sam would withhold about a third or half of it and I could use the rest to fix the house stuff and file Chapter 13 before the company that bought my first year of back taxes takes the house next April.
Speaking of April, I’m a W-2 employee, but my company doesn’t withhold Federal taxes. I’m pretty sure that’s illegal, but their thinking seems to be that they pay us so little that, between our poverty and a judicious use of the Earned Income Tax Credit, none of us pay taxes, anyway, and the withheld amount of the pension will cover that. And yes, I am actively looking for another job. Why I stayed here this long is another story.
It turns out, though, that the pension is over fifty-thousand, American, making it a bit more complex and causing my wife to assume I haven’t thought everything out and that there are tricks to protect it that I don’t know. I don’t have exact numbers on me but let me bounce my cunning plan off you.
Sam will take $20,000/40% or so off the top, leaving me with $30,000. Back taxes are about $18,000, repairs are $2000 to $4000, Chapter 13 is $3500 upfront, according to a lawyer I spoke to last year. However, with the back taxes out of the way and the probability that, as I have stopped receiving letters and calls about my biggest medical debts, those may have been written off as bad debts (I’m delaying poking that hornet’s nest until I’m stronger financially), I think I could skip the bankruptcy and work with somebody who doesn’t advertize on daytime TV to restructure my debt. I’ll get a fair chunk of the $20k back from Uncle Sam next spring and be able to fix up this dump enough to sell it for more than I owe on it. Wife starts her new job in a couple weeks and I’ll find a better one and we’ll all live happily ever after.
So, that’s my plan. How stupid and short-sighted is it?