TSP Loan to Pay Off Credit Card Debt

[Anonymous]

In dire straits here. We have about $55K in credit card debt and another $83 in our HELOC. My husband has been unemployed for almost 2 years, made a horrible business investment against my advice, and owe the IRS over $100K (which the IRS is holding me responsible for since we're married and file jointly, even though the debt is due to the fact that he didn't pay enough income taxes for years). I have about $450K in my TSP; he has no savings because he depleted everything for this business venture. We have 2 kids in elementary school.

Do I take a TSP loan to pay off the credit card debt? I think the financial answer is yes, except I'm beyond irate that we're in this hellhole because of him and really want a divorce. Unfortunately, the credit cards are in my name, so the divorce won't affect my liability for the credit card debt (and same for the HELOC and IRS).

Please help. Yes, I know I shouldn't have married this loser in the first place.

[Anonymous]

Once you do that, how would you make sure you don't run up the cards again? Do you have preventive measures in place?

[Anonymous]

There are a lot of reasons to divorce, interestingly, trying and failing at a business venture I don't see as one of them. But you clearly know him better than we all do here on DCUM. I mean he presumably tried and failed. That's kind of the classic American way of business. Failure is basically expected for many businesses. But eventually he might get it right.

i would take the loan and pay it all off. I would then encourage him to try to look for any kind of work even if it is driving for Lyft or Uber until you are both back on your feet.

You should also figure out why you want to divorce him.

[Anonymous]

I would do it if I were you OP. I had 40k in credit card debt and the TSP loan helped a lot. It’s hard to pay off the cards with $500 a month in interest. With the TSP loan you will pay it off in 5 years and your payment will possibly be less because a much lower rate. You can go through the process of setting up the loan on the site and get the payment amount without actually finishing it and accepting the loan (if that makes sense) just to see what the payment will be like. Unfortunately you can only do 50k so you’ll have to find the other 5k elsewhere.

Also, look into this.
https://www.irs.gov/businesses/small-businesses-self-employed/innocent-spouse-relief

[Anonymous]

Anonymous wrote:There are a lot of reasons to divorce, interestingly, trying and failing at a business venture I don't see as one of them. But you clearly know him better than we all do here on DCUM. I mean he presumably tried and failed. That's kind of the classic American way of business. Failure is basically expected for many businesses. But eventually he might get it right.

i would take the loan and pay it all off. I would then encourage him to try to look for any kind of work even if it is driving for Lyft or Uber until you are both back on your feet.

You should also figure out why you want to divorce him.

Failure is expected in business ventures which is why bankruptcy exists.

[Anonymous]

Anonymous wrote:

Anonymous wrote:There are a lot of reasons to divorce, interestingly, trying and failing at a business venture I don't see as one of them. But you clearly know him better than we all do here on DCUM. I mean he presumably tried and failed. That's kind of the classic American way of business. Failure is basically expected for many businesses. But eventually he might get it right.

i would take the loan and pay it all off. I would then encourage him to try to look for any kind of work even if it is driving for Lyft or Uber until you are both back on your feet.

You should also figure out why you want to divorce him.

Failure is expected in business ventures which is why bankruptcy exists.

That’s a good point but a bankruptcy might get the OP fired depending on her position.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:There are a lot of reasons to divorce, interestingly, trying and failing at a business venture I don't see as one of them. But you clearly know him better than we all do here on DCUM. I mean he presumably tried and failed. That's kind of the classic American way of business. Failure is basically expected for many businesses. But eventually he might get it right.

i would take the loan and pay it all off. I would then encourage him to try to look for any kind of work even if it is driving for Lyft or Uber until you are both back on your feet.

You should also figure out why you want to divorce him.

Failure is expected in business ventures which is why bankruptcy exists.

That’s a good point but a bankruptcy might get the OP fired depending on her position.

Yes. I was just pointing out that saying business failure is fine is a cop out if OP isn't able to take advantage of bankruptcy.

[Anonymous]

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.

[Anonymous]

Anonymous wrote:There are a lot of reasons to divorce, interestingly, trying and failing at a business venture I don't see as one of them. But you clearly know him better than we all do here on DCUM. I mean he presumably tried and failed. That's kind of the classic American way of business. Failure is basically expected for many businesses. But eventually he might get it right.

i would take the loan and pay it all off. I would then encourage him to try to look for any kind of work even if it is driving for Lyft or Uber until you are both back on your feet.

You should also figure out why you want to divorce him.

He entered into a business venture against the wishes of his spouse and then did not set up the business in a manner that insulated personal assets and created $100K+ worth of CC/HELOC debt in her name, and you don't know why she might be considering divorcing him? AND h e he hasn't worked in two years. Wow. You're far more generous than I could ever hope to be.

OP, I know you're in a bad place now, but have are you at all able to seek legal counsel, even through a pro bono program? Long story short, my parents' divorce involved both state and federal revenue authorities for similar reasons, and the only way my mom came through it was through her attorneys' negotiations (and, then, after, it took years to rebuild her credit). Before you take on more debt, see if you can find a tax attorney and do a free consultation with a divorce attorney as well.

[Anonymous]

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.

[Anonymous]

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?

[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'm so sorry, OP. I hope you're making sure you get sound legal and financial advice from someone you trust. It seems that you've been too trusting re IRS filings, joint credit card accounts, etc. I' wondering if he's always been "a gambler" and possibly has substance abuse issues? Hugs to you.

[Anonymous]

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

[Anonymous]

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?

When the govt opens back up, try the Taxpayer Advocate Service for help with the innocent spouse denial. They may also be able to get you into an installment payment or an offer in compromise.

[Anonymous]

Get legal advice before you touch the TSP. Otherwise you may have to add that to your list of regrets.