cosign 11.10

When you co-sign for a friend or family member, you’re doing them a big favor. You are letting them use your good credit and reliable income, and it’s usually because theirs isn’t good enough. The creditor, whether it’s a mortgage lender, car dealer or landlord, thinks it’s too risky to lend to your friend or family member. But, they’ll do it if you sign on. There’s nothing wrong with wanting to help someone you care about. Just make sure you know what you’re agreeing to.

In addition to signing paperwork for the loan, you should be given a document that explains the obligations of a co-signer or “guarantor.” It’s meant to alert you to the responsibility you’re taking on. It might include the following warnings:

• You are responsible for payments the other party fails to make

• You are responsible for the entire amount of the debt

• You may have to pay late fees and collection costs

• You can be the subject of debt collection procedures

• You can be the subject of a lawsuit to collect the debt

• Your wages can be garnished

• Your credit score can be affected

When you co-sign, you are the safety net. You should be prepared to pay if the other person doesn’t. No matter how much the other person promises that they will pay, you can’t guarantee that they will. Make sure you’re prepared for that eventuality.

On a related note, never lie in order to get a loan or financing. We’ve heard from people who were asked, by the lender, to lie about their employment in order to get approved. They were actually told to sign paperwork that listed a completely fake job. Don’t let a lender coerce you in this way. Even though you didn’t make up the lie yourself, if you sign it, you may as well have.

If you have co-signed and the creditor is coming after you for payment or you’ve received a notice in the mail that you have to pay, talk to an Illinois attorney about your rights and obligations. Don’t wait too long – your credit history could be affected. The creditor may not be able to come after you in certain situations. An experienced attorney can talk to you about any available defenses.