Even if you file for bankruptcy, your retirement funds are "exempt" from the reach of creditors. That means the people you owe money cannot take your retirement money.
A legitimate 401K, IRA etc., cannot be taken by your creditors to pay overdue bills or judgments. The bankruptcy code as well as most state laws do not allow creditors to take your retirement money - it is "sacred".
So, if you are drowning in credit card debt, please don't rush to cash in all or part of your retirement nest egg, as in most cases a bankruptcy filing will discharge or get rid of these debts.
Also, cashing in all or part of your nest egg ahead of your retirment age usually has adverse tax consequences. If you cash in your 401K, IRA, 403B, etc., to pay bills, you will most likely pay taxes AND a penalty on the portion you cashed in to use before retirement age.
Your retirement funds are for YOU to protect YOUR future when your earning capacity is lowered. Please don't risk it by making a hasty decision to cash in all or part of your retirement funds to pay demanding creditors - you don't have to do it!
If you are facing this decision, PLEASE contact an attorney. Most bankruptcy lawyers, like myself, provide their first consultation free.