Helping someone acquire a financial product by cosigning a loan may not seem like it is a big problem at the time. If you have good credit and you can help out a family member or friend, this may seem like a no-brainer upfront but it could also put you at risk. Acting as a guarantor on the loan will directly put you at risk of repaying the loan if necessary. Here are a few things to think about when you co-sign someone else’s loan.
Any late payments on the loan from the person that you vouched for could also directly affect your own credit score. If you cosign a loan and someone pays late or missed a payment, this will have a direct effect on your credit score.
If the individual that you cosign for stops paying their loans there’s also a good chance that a debt collection agency will contact you so that they can acquire the past due funds that they are owed. This can and with the chance that you are being constantly called and emailed in order to get the money collected from you. Some collection agencies may even try to collect the money from you in person by showing up at the door.
Rather than getting involved in an ongoing suit for someone else’s negligence, it may be wise to think twice before you cosign a loan.
In some very unfortunate cases people that of cosign have been responsible for foreclosure on property as well as repossession of vehicles because they were unable to repay the debts of a person that they vouched for.
If you’ve already cosigned on a loan and you need to work at negotiating with a lender who has contacted you about you cosigning the loan, it may be wise for you to contact a bankruptcy attorney today. Under Chapter 7 bankruptcy you may be able to discharge this type of debt as well as establish a selloff plan to remove the charges against you.