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Consequences Of Co-signing
by John M. Roberts

Co-signing with someone to purchase, lease, or rent a home, car, credit card, or any other type of property can have unpleasant consequences on you, your family, and your lifestyle. It doesn't matter who the person is that you are planning on co-signing with. What does matter is the end results. Any time you are asked to co-sign with someone, you should think about it and say yea or nay with an open mind.

It doesn't matter what you are co-signing for. By co-signing, you agree to take on the responsibility of the contract if the person you are helping does not live up to his or her end of the deal. You may find yourself paying for something for many years that you don't own or don't even want, and that can bring on financial hardship, unwanted debt, stess, and feelings of anger and frustration.

What are some of the negative consequences?

  • Your FICO score may take a substantial drop.
  • You may find yourself paying for something you are not using or don't even want.
  • If you co-sign for a home or other real estate, you may have a notice of default filed against you and you may have to face the prospect of having a foreclosure on your credit history.
  • If you co-sign for a car, it may go on your credit as a repossession.
  • You may find yourself involved in a lawsuit, spending time in court, and having a judgment rendered against you.
  • Your wages may be garnished.
  • You may have to file bankruptcy.
  • Credit card companies, mortgage companies, banks and other creditors will hound you every day by telephone and by mail.
  • Worry, unpleasant conversations, and loss of sleep may cause physical and mental stress and strain on your health.
  • You can lose the love of a relative, lose friendships, and suffer long term negative consequences on your credit history.

It is very easy to help someone who needs help, and that's a good and honorable thing to do, but you should know and understand the consequences of your goodwill. Think about what is going to happen if the person you decide to help does not live up to his or her responsibilities.

Things to think about:

  • If the person you want to help cannot make the payments on the car you are co-signing for, can you make the payments?
  • If you co-sign for a home or other real estate, can you make the payments on your home and that property, too?
  • Can you afford another credit card payment, especially one that has been charged to the limit?
  • If the person you co-sign with quit making contractual payments, how will it affect your personal relationship?
  • By co-signing, how will this affect your overall lifestyle?

Co-signing for anything is a big step with big responsibilities. You should always look at the pros and cons before you take such a leap of faith and always remember that just because you love a person, trust a person, or consider a person your friend, in the end, you are just as responsible for the debt as they are.

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