Opinions please - help my mother!

[Deborah Smith]

My mother is planning to retire, and depsite having a CPA daughter and son-in-law, she still believes she knows best when it comes to finances.

So, I am posting this so that perhaps, in your own words, you would be kind enough to share your thoughts whether this is a good or bad idea:

She plans to cash out her entire 401k ($12k) and use it to pay off her credit cards so she can retire debt free.

Additional background info - she has no other investments. She owns a SFR in poor condition with about $75k (maybe?) in equity only because she put $100k down on it back in 2008 (she is of the belief she has zero equity). She has burned through ALL of her savings and maxed out her credit cards. Nothing in the house is of value. Her car is worth maybe $1500. She is disabled, and if she quits or otherwise loses her job, she is not employable anywhere else (really, trust me). She plans to live entirely off of social security, which is $856 a month. She is 65. She makes too little to qualify for an apartment (even senior subsidized housing), and cannot afford to keep her home at a $700/month mortgage payment.

Given that situation, please let me (and her) know your thoughts on whether it is a wise financial move to cash out her 401k to pay off credit cards.

Thanks in advance for your input, either way you lean!