Can you imagine losing a long friendship over a signature? How about being sued by a family member?
This type of situation happens more often than we would like to imagine. It often occurs when one party is seeking financial assistance from someone else by requesting a cosigner. Before you sign your name on the dotted line keep in mind that you are equally responsible.
Generally, a car loan co-signer, home loan co-signer, student loan co-signer — in fact a co-signer on any type of loan — has full responsibility on the amount of the debt. In retrospect, the credit reporting agency knew more than the co-signer who now faces liability on a delinquent or default loan on property or assets they never enjoyed.
“Many people believe that if there are two or three signers, they are only liable for one half or one-third of the debt,” notes Wendell Schollander and Wes Schollander in “The Personal Bankruptcy Answer Book.”
Don’t be mistaken. A creditor can sue any party on the loan document either individually or collectively. If you are concerned about that credit card that you cosigned to help build a family member’s credit then you should be. When you decide to pay off the balance and close out the card the nightmare isn’t quite over. Most creditors will reopen the card with a new account number within 30 days of closing. Yes!!!!
You are still on the hook for payments. So, before you perform an act of kindness from your heart remember this can become a situation you never would’ve imagined.
Most people begin their financial relationships with good intentions. It can turn in the blink of an eye just like a rain storm into a tornado. We all know how much damage a tornado can do.
If you don’t take anything else from Fabulous & Money Savvy ™ remember that if you want to continue a friendship and if you don’t have enough money to assume full responsibility of the payments…then don’t sign your name on the dotted line.
“Love yourself enough to support yourself.”
Property of SMG, LLC
Reported by Bahiyah Shabazz, MBA
- Does the primary owner have rights to a auto the cosigner wont pay for (wiki.answers.com)
- Think Before You Choose to Cosign for a Loan (brighthub.com)
- Why You Should Never, Ever, Cosign a Loan for Anyone (theatlantic.com)
- Important Considerations for Settling Joint Debts (debtsettlement.com)