I have heard that story from about a half dozen people with Fidelity 401(k), and that is one of the reasons I will never, never, ever have a 401(k) with them. It’s MY money, right? So why can’t I access it during a fiscal emergency, huh? I understand you don’t want people hitting the 401(k) like an ATM but seriously, they don’t consider foreclosure a hardship?
And what’s with Fidelity employees telling people “this is how you can withdraw money” only to have the company turn around and say “nope!”?
They weren’t evicted, but I know a family who abandoned their house after the downturn and moved to Australia. Home bought near the peak of the bubble, set of triplets to care for, when he lost his job, they didn’t have enough money to pay for a mortgage and medical insurance.
Since the wife was Australian, they made a quick decision for her and the kids to move back to her homeland, they got a place to stay and medical coverage, while he tried to keep it together here in the States. That didn’t exactly work out, and he moved a few months later to be with them. Seems to have been a good move for them, all in all.
I’ve come across quite a few who have lost their homes due to bankruptcy during a marital breakdown. Usually it is only one of many problems they are facing.
I’ve acted for banks on occasion. Where I am it is a long process, so people have lots of opportunity to find other accommodations. The folks that try to hang on rather than find other accommodations tend to be pretty messed up in the head. Might as well try to talk to a brick wall than try to work through the problem with them.
Since mortgages are secured, more often than not when a person goes bankrupt (in Canada) due to debt load as opposed to a decrease in income, usually they can keep their houses, for going bankrupt frees up more of their income to pay their mortgage. The trick is to be mortgaged to the hilt so that there is no equity remaining in the home – that way the unsecured creditors can not force a sale to free up the equity.
Thanks for sharing, it was actually very interesting. How are you doing these days? And what was up with your wife when all this was happening? I mean, she couldn’t take custody of one or more of the kids for a while?
I ask this not to be snarky but genuinely curious: what are my options? My company does 401K through Fidelity and if I want them to match at all I have to go with them. I mean, is it more prudent to take the money out and move it somewhere else?
In other news I got evicted once - but from an apartment. I was paying the rent, but they were tacking on extra fees. I can’t remember what for now, but it was either for one late payment, and then they tacked on fees for every month, or something like that. Well, I paid the rent but I did not pay the late fees. They gave me something like 45 days notice. It worked out for the best because that apartment had a water dam over the spare bedroom.
But I admit I had some of the “cover your eyes and it will all go away” mentality. I never dreamed they’d kick me out for not paying extra fees. When she called me I told her I’d pay all the fees, but they refused to accept it and just kicked me out. I begged, but she wouldn’t budge. It was kind of humiliating.
This is the first time I’ve shared that story in public. Like turtlescanfly, it’s kind of cathartic to confess one’s stupidity (I’m not saying he was, just me) in a public forum.
I don’t know if this is true or not because I heard it second hand. This would have been the late 1960’s. Apparently my aunt & uncle fell on hard times and couldn’t pay their rent - one day they came home to find the locks changed on the door. My aunt was pregnant at the time and all the stuff for the baby was in that apartment and they lost EVERYTHING.
I wondered how that would work if they had pets - the landlord would have to let them in to get their animal otherwise it would starve to death!
The employer/plan sponsor, not the trustee, determines whether or not a plan will provide hardship distributions or loans. Not all plans do. For instance, I think (not sure) that my company’s plan allows hardship distributions, but I know it does not allow loans. It may be that Fidelity assumed that the plan(s) in question allowed a hardship distribution then discovered that it(they) did not.
If your employer offers a 401(k) or 403(b), ask for a Summary Plan Description to find out how the plan operates.
Yes, that scares me too. My SO and I are doing very well now financially. We’re by no means rich, but I am going back to school in an effort to get a better-paying job, we can afford luxuries, we never have to worry about rent like we used to, we rent a nice house in a nice part of town, we have savings, 401K, etc. But if one of us has a major illness, that’s it. We’re fucked. We both have health insurance but it’s exceedingly naive to think that that will save our bacon.
I lost my first house to foreclosure. I was sick for months, lost my job, alternated paying bills (electricity one month, phone the next), my doctor gave me samples to get by on medication, I ate very little and when I did it was stuff like a box of pasta I would stretch for 3 days, etc.
Eventually I was just too exhausted, sick and broke. I nearly had a nervous breakdown when I couldn’t even take 20 bucks out of the ATM. They finally foreclosed and I would have been homeless if not for my boyfriend.
This. I have friends who almost lost everything because of an illness. The wife contracted a fungal respiratory infection and was in a coma for months and almost died twice. In the end, after insurance, they ended up with over $600,000 in medical bills and lost her income.
My neighbor lost his house to foreclosure. It was sickening to see the Freddie Mac letter taped to his front door. That was about a year and a half ago… I hope he’s doing better now.
I know a guy who bought a house with the money he got from a civil lawsuit. He used it to buy a house for his girlfriend. His wife did not know about the girlfriend, the house, or the lawsuit.
The guy ended up losing both women and both properties.
Your alternative is to set up your own retirement account(s) outside of your employer. True, you miss the matching, but you can maintain much more control of your money than you would through Fidelity.
What is most prudent for YOU depends on YOU and your finances. A Fidelity 401(k) does work well for many, but not for all. I elected to NOT go with the Fidentlity 401(k) at work. Yes, I missed out on the matching. But when the Great Recession came I was able to tap into my stashed resources to keep me going until I got permanent work again, without having to beg someone else for MY money. A retirement account does me no good if I need money NOW to keep a roof over my head and food on my table.
Of course, I now have to rebuild those resources… that’s a downside to how I managed my finances. Since I wasn’t planning to retire for another 20 years, and I don’t require a lavish lifestyle, that’s doable. Also, I have an honest-to-god pension coming to me, so foregoing a 401(k) is less of a risk to my retirement than it would be for someone without a pension.
For darn sure, this is an area where YMMV applies in spades.
Thanks for asking, I’m doing well. I don’t want to get this thread off topic, so I’ll just say it was my choice to stay in the house and keep custody of the kids and I wouldn’t have changed that for anything!
I posted in the infidelity thread a couple weeks ago, part of my story is there.
And “Sorry” to bobkitty, I see she posted a first hand account before me (and I DID read the thread prior to posting).
My brother and his wife are idiots whose long term financial plan was to buy a house and lots of other stuff they couldn’t afford and declare bankruptcy as often as possible. I’ll never forget the night this plan came into being. My sister-in-law was talking about a friend of hers who had declared bankruptcy and hey, you get to keep your house and cars! So they did this twice in seven years - no loss of job, no illness, just greed. At that point, with no credit available to them, things went downhill fast and they were years away from being able to declare bankruptcy again. They borrowed $5000 from me to try to keep the house but then declared one day that they had sold the house and moved into an apartment. I thought the story was fishy so did some checking and found out it had been foreclosed.
They both took on part time jobs in addition to their full time jobs. They did pay me back over several years but were constantly in crisis mode. They ended up moving in with my mother for a few months and then borrowed another $4000 from me because they were paying $1700 a month in interest to several payday loan companies. (Despite my intention of not helping again, I couldn’t turn down my crying sister-in-law but made it clear this was the last time.) They have paid that money back and last month they both quit their part time jobs so I’m assuming things have finally gotten stabilized. But this was a 15 year process that completely wore them down. They will never be able to buy another house or be able to retire at a reasonable age (my brother also borrowed money from his retirement plan). All they can look forward to is living month to month. So sometimes it happens because people are just stupid and really think they can get something for nothing.
Sadly, twice and incredibly, both times it was husbands who passed over the paychecks, trusting their wives to pay to bills. And who claimed they didn’t know a thing until the sherrif knocked, or whatever they do. One of the guys split for a while, but went back to her for the kids.
I don’t actually know anyone who has lost their house. And it’s amazing too, considering that I lived in one of the bubble areas and most of my acquaintences were on the high-income side of middle class, and were at the time of the lives where they were buying houses during the bubble, and so would seem to be prime targets for buying more than they could afford. Then again none of them lost their job or wanted to move out of the area, so they have so far been able to stay in their overpriced places even though I’m sure many of them are underwater.
I’m underwater, too, but considering I spent less than 1/4 of what I could have bought a house for, it’s not that big a deal.