TSP Loan to Pay Off Credit Card Debt

Anonymous
You have to get spouse approval for the TSP loan. We did for down payment money for first house. Is he on board with the loan? I would do it and then immediately divorce once you get the mess cleaned up. Maybe he’ll sign some sort of promissory note to pay half? It seems like you’re going to be the one left holding the bag in all of this. Maybe cancel the credit cards?
Anonymous
OP that sucks but I think you are right that a TSP loan makes sense here. On the bright side, if we head into a recession your TSP balance might be better off in the end “invested” in your loan for a few years than in the stock market.

Good reminder for others as we head into tax season that the IRS expects you to review your taxes and have a basic understanding of what’s going on, even if someone else prepares them.
Anonymous
Anonymous wrote:OP that sucks but I think you are right that a TSP loan makes sense here. On the bright side, if we head into a recession your TSP balance might be better off in the end “invested” in your loan for a few years than in the stock market.

Good reminder for others as we head into tax season that the IRS expects you to review your taxes and have a basic understanding of what’s going on, even if someone else prepares them.


+1 I also think that many women need to be far more aware of the consequences of filing taxes jointly, especially if spouse has issues or takes on risky business ventures.
Anonymous

Didn't you have to sign for that HELOC? Is the house in both of your names? Did you sign the tax returns?

You are partly to blame for this even though you say he "started the business against your advice".

Sorry to hear about this OP. It's an expensive lesson. You definitely need professional advice on the best way to resolve all of this.
Anonymous
Anonymous wrote:
Anonymous wrote:You need immediate legal advice. I would close all those accounts and stop giving him access to credit in your name. Do no touch the TSP until you have legal advice. I’m concerned you will be giving this loser palimoney and part of your retirement assets. Again please get some good legal advice. Can you appeal the innocent spouse?

This


Thirding this - please, please, please get legal advice on this before you take out yet another loan for him. A divorce attorney will usually do a free initial consultation.

Also, as someone else mentioned, retirement plan loans usually involve spousal approval. I had to get mine to sign off on the 401K loan we used for part of our first home downpayment, and, when they were looking into a TSP loan, I would have had to sign the paperwork for that. No reason to think that your spouse wouldn't sign off on you bailing him out again, but just be aware of the likely requirement.
Anonymous
Op you don’t sound ready for divorce. Just prepare yourself, because after you bail him out again and he screws up again if you do get that divorce he’ll take your retirement and palimony. Just cut the dead weight now.
Anonymous
Anonymous wrote:
Anonymous wrote:You must be w the Feds for a while to have that much in TSP. That means you probably have a sizable FERS. You can always live abroad for a fraction of the price andive like a queen on SS and FERS alone. You'll still have a sizable TSP left over + money from a home left over if you have one. Living abroad really isn't that scary.


OP here. I’d love to live abroad, but DH (or future XH) would never let me leave CONUS with the kids.

Thanks for the advice; sounds like I should go for the TSP loan. I’ve already applied for innocent spouse relief but was denied because they apparently want to see a police report or some other documented abuse. I never had credit card debt until we started using my cards for joint expenses, and I’m confident
I can stay debt-free as long as he’s out of the picture.

The reason I want a divorce isn’t that his business failed but that he made pretty much a unilateral decision to quit his job and put all his money into the business, and actually got annoyed with me when I questioned whether it would be a good idea when we had no savings but rather a large debt with the IRS, which I forgot to mention put a lien on the house, so we can’t even do a refi to pay down any of the debt. And even though i’m the sole breadwinner, i’m still the one doing most, if not all, of the cooking, cleaning, laundry, child care, etc., while he’a glued to his laptop or phone all day, ostensibly in the name of “business opportunities.”

Ugh, thanks for letting me vent. I know some of this belongs in the Relationship forum.


I don't really have much to add but I just wanted to send big hugs your way. It seems like you are going through a lot right now. Rest assured - you WILL make it through.
Anonymous
You have 238K in debt. How much equity do you have in your house? If you could get out from under most or all of the debt through selling your house you may want to consider that. Then divorce and start fresh. He will likely get a chunk of your TSP in the divorce in any event but getting out from under the debt will be huge.
Anonymous
Consult a lawyer. Once you divorce him, I would look at going abroad for your job. If he doesn't have stable income, he probably can't contest. You can build back your credit and savings and your kids will have a great adventure.
Anonymous
I second the recommendation to contact the Taxpayer Advocate Service once the government reopens and they may be able to assist you with appealing your innocent spouse claim, filing an Offer in Compromise to pay off the liability for less than the full amount, or discuss other options. Their services are free and they can talk about options you may not be aware of.
Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:You need immediate legal advice. I would close all those accounts and stop giving him access to credit in your name. Do no touch the TSP until you have legal advice. I’m concerned you will be giving this loser palimoney and part of your retirement assets. Again please get some good legal advice. Can you appeal the innocent spouse?

This


Thirding this - please, please, please get legal advice on this before you take out yet another loan for him. A divorce attorney will usually do a free initial consultation.

Also, as someone else mentioned, retirement plan loans usually involve spousal approval. I had to get mine to sign off on the 401K loan we used for part of our first home downpayment, and, when they were looking into a TSP loan, I would have had to sign the paperwork for that. No reason to think that your spouse wouldn't sign off on you bailing him out again, but just be aware of the likely requirement.


This. OP, you need to talk to a lawyer (if you're not ready for a divorce lawyer, at least one who understands retirement accounts).
Anonymous
OP, please note that you will be paying a substantial early withdrawal penalty PLUS income taxes on the money you withdraw. Run the numbers. You could lose half your TSP to the penalty and taxes, and it may not be worth it.
Anonymous
Anonymous wrote:OP, please note that you will be paying a substantial early withdrawal penalty PLUS income taxes on the money you withdraw. Run the numbers. You could lose half your TSP to the penalty and taxes, and it may not be worth it.


Disagree. I believe OP is referring to a TSP loan, not a TSP withdrawal.
Anonymous
OMG OP I hope you haven't done it yet. You have not included any of the actual important information needed to determine if it is a good idea in this thread, and yet people were telling you to do it!!!!

How old are you? What is your HHI?

I agree 100% with the posters who said to contact an attorney BEFORE DOING THIS.

At this point, with his history, you need to protect yourself and your children.
Anonymous
I didn’t have to sign off on my husband’s 401k loan. I think it depends on the plan.
post reply Forum Index » Money and Finances
Message Quick Reply
Go to: