We understand how hard it is to say no, especially to a friend or family member. Let me say this loud and clear, when a family member of a friend asks about cosigning a loan for them, RUN FOR THE HILLS! JUST SAY NO! DO NOT UNDER ANY CIRCUMSTANCES SIGN THAT LOAN!
No matter how sure you are that they won’t default on the loan, you may even feel it in your soul, DON’T DO IT. If a lender is asking for a cosigner, there’s a good reason. It’s because they believe that the primary borrower won’t be able to make their financial obligations. More often than not, the lender is right.
When it comes to cosigning, you’re being asked to guarantee a debt. If the primary borrower doesn’t repay the debt, you’re on the hook for the debt and the creditor WILL come after you. You’ll be on the hook for late fees, collection costs, attorneys fees and the principal balance of the loan. If the debt goes into default it WILL show up on your credit report. The bottom line is, cosigning is always a bad idea.
Cosigning is always a bad idea. Have I made myself clear up to this point? Cosigning a debt puts you in the worst possible situation. You receive no benefit from the loan you’re cosigning. You aren’t getting a student loan to improve your education, you’re not getting a house to live in and build equity in, you’re not getting that flashy new car to ride around town in. You’re just on the hook for all of it. You can have you bank accounts and assets seized, your paycheck garnished, you could be subject to litigation and you could ultimately end up in bankruptcy.
We understand that it’s difficult to refuse to help someone you love. Telling friends or family members no is one of the toughest things you can do. However, it may be the best thing you can do for your relationship. Think about what your relationship will be like if your friend or family member defaults on the loan or even just misses a payment. That’s going to show up on your credit at a minimum and will likely bring your score down 20 or more points. The damage that cosigning can do to relationships can not be understated. You’ll be left with a loan and a relationship that will be severely damaged from here forward.
If you’ve cosigned a loan with someone who has missed payments or defaulted on a loan completely and you find yourself on the hook for their mistakes the attorneys at Harmon and Gorove can help. We are experts in dealing with these kinds of issues through the bankruptcy code. Contact us today for a free, no obligation consultation about how we can help you get out from under these debts and get your life back.