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Q-and-A: Credit and Consumer Debt

Q: I am not sure how to handle my recent situation: We have been living month to month with just enough income to get by. My wife makes about $24,000 a year. I just lost my job a week ago. We have been paying down our credit card debt by paying over the minimum payment required. Our current credit card debt is about $17,000 on about four accounts, none of which we pay interest on yet due to taking advantage of balance transfers with no interest.
We also have a home equity loan with a balance due of about $75,000. Our home is worth about $450,000. I also have a small building lot, valued at about $30,000, which I have for sale. I have $15,000 in a 401(k) and $110,000 (and dropping) in an IRA.
We have no other savings. I will not be able to make my payments on these obligations within a very short period of time. We are not extravagant in our style of living. Do I notify my credit card companies of my job loss and inability to pay until I get a new job and back on my feet? Should I take the hit of penalties and interest and take money from my IRA and 401(k) and pay down these debts? Being 53 years old, I will not have enough years left to build my retirement back to anything substantial. Would you advise trying to sell our home? What advice do you have that would have the least effect on my credit rating? –Keith, South Carolina

A: You are certainly not alone in your predicament, but you do have resources you can use to keep current on your credit card and home equity loan obligations:

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