Should I use my 401k or IRA to pay late bills?

If you can avoid it, do not use your retirement assets to pay bills.

One mistake people make to prolong having to file for bankruptcy protection is to use the funds that are shielded from creditors in bankruptcies, such as IRAs, pension funds and 401(k)s. Many people have borrowed against their 401(k) or maxed out the equity in their home and have had to file a bankruptcy anyway.

Unfortunately they have spent the assets that are protected in the proceedings and would have given them a fresh start. Borrow from your retirement nest egg only as a last resort.