Shall I use tax free pension draw down to clear credit card debt?

Moofy

Hi,
I'd really welcome any thoughts...
Due to corona virus I can no longer service my credit card debt of £55k.  And I can't be certain that situation will improve.  I have no other debt (that's enough!).
I have sought advice from a number of debt management organisations and have been advised with a variety of possible solutions including bankruptcy, IVA , reduced settlement agreement or a debt management plan.
My question is - should I draw down on my pension pot to help clear the debt?  I'm 60 years old - it is not a huge pot - not enough to clear it - I could draw about £25k.
The credit card companies might be willing to accept some payment if the alternative is bankruptcy where they will get nothing!  (I have no assets and am in rented accommodation).  Any thought would be very much appreciated.

tacpot12

If you can avoid drawing on your pension, it would be better to do so, but you need to think about the implications of bankruptcy or IVA. Losing all your pension might be the better option when all is considered. 
Are you able to draw out enough  of the pension pot to continue making minimum payments while you seek a job so that you can service the debts again? 

Moofy

Thank you so much for responding. Much appreciated.
I am self employed - and am optimistic that things will pick up - but probably not quickly enough to meet the minimum payments and that means the interest will just build and build.  If I do a debt management plan and so get the interest and charges frozen - I can at least make regular payments while I try to rebuild the business.  I guess my preference would be that the credit card companies would accept something like 20p in the pound for a full and final settlement.  I know my credit rating would be damaged - but I can live with that.  Any comments on offering full and final settlements would be welcome - or anything else :-)

kangoora

I think this would be best transferred to the Debt-Free Wannabe board - or the OP could redo the post there.

Lots of help and support on that board and some very clued up individuals on IVA, DMPs, Bancruptcy etc. My initial thought would be to avoid drawing from your pension unless an absolute last resort.

steampowered

Pensions are protected from bankruptcy.

You might be better off declaring bankruptcy and keeping your pension. I wouldn't draw down on the pension just to temporarily service a bit of the debt.

Dox

Moofy said:

Hi,
I'd really welcome any thoughts...
Due to corona virus I can no longer service my credit card debt of £55k.  And I can't be certain that situation will improve.  I have no other debt (that's enough!).
I have sought advice from a number of debt management organisations and have been advised with a variety of possible solutions including bankruptcy, IVA , reduced settlement agreement or a debt management plan.
My question is - should I draw down on my pension pot to help clear the debt?  I'm 60 years old - it is not a huge pot - not enough to clear it - I could draw about £25k.
The credit card companies might be willing to accept some payment if the alternative is bankruptcy where they will get nothing!  (I have no assets and am in rented accommodation).  Any thought would be very much appreciated.

https://www.citizensadvice.org.uk/debt-and-money/borrowing-money/credit-cards/if-youre-struggling-with-credit-card-debt/ gives a lot of sensible information and advice.

Please don't rely on advice here, however well informed - there simply isn't enough information in your post to give a properly informed reply based on your individual situation. A chat with https://www.stepchange.org might be a positive next step at what can only be a horribly worrying time for you.