Be Careful Who You Co-Sign With

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Lots of Credit CardsWhen I first moved to Maryland for work, I rented an apartment with a friend of mine. He was a good roommate and a great friend, so much so that we even discussed buying a house together. We never got past the discussion phase because my parents recommended against it when I brought it up. His did as well. Since then we’ve looked back on that moment as a fantastic time to start taking our parents advice because buying a home with someone, regardless of who it is, can be a very tricky proposition.

That said, we are often put in situations of far lesser magnitude where we might be tempted to co-sign an agreement with someone. You might be asked apply for a joint credit card or co-sign a loan, I would be very careful about who you agree to do that with. In fact, I am pretty sure I will never co-sign a loan with anyone other than my wife.

The problem is that you often enter these arrangements on sunny days, never thinking about when there will be a thunderstorm… and storms often come sooner and harder than you think.

Here’s a story from a reader:

This article bought up an unpleasant memory for me and my future wife. We are both divorced. When her settlement was made she took a credit card and he took one and they were to both by divorce decree to pay off the one they took. She has paid her’s off and he still is adding to his. we contacted the credit card company on this matter and they won’t release her from it even though the divorce clearly states he is responsible for that debt. So far he hasn’t been late enough for the card company to take any action. My question is how does she get her name off of the card. She fulfilled her responsibility and he is still holding this over her head five years later. Any advice would be great. So far the credit card company or the one attorney she has asked about it say as long as he is paying on it he can do so as he pleases. She just wants her name off the card and the credit card company said it didn’t matter what the divorce says, she is a co holder of the card.

I think this would be a great article to help out plenty of people before it happens to them.

Sadly, she’s still on the hook because she’s the one on record. You might be able to get a court order to change that but short of that, she’s still responsible. I’m not a lawyer so I don’t know how you go about doing that but sadly these are the storms.

Be careful who you co-sign with.

(Photo: seishin17)

{ 12 comments, please add your thoughts now! }

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12 Responses to “Be Careful Who You Co-Sign With”

  1. Yes! Totally agree! Co-signing for anyone is most likely not a good idea. My guess is that in most cases everything will be fine if you trust your gut instincts on signing for a loan but unfortunately life happens and circumstances change.

    One thing you may want to check and see is what the lender’s policy is for removing the co-signer after so many on time payments. This is becoming pretty popular with private education loans and may be available in other sectors as well.

  2. TomM says:

    If you plan on having kids and plan on sending them to college you will more than likely be a co-signer on a loan for them to go to college. I know that this can easily turn into a problem too but sometimes it’s the only way.

  3. zapeta says:

    I agree. The only person I’d cosign with is my fiancee, and my (eventual) children if they need a loan for school. I’m hoping that we will have saved enough for college by then that they can avoid taking out any private loans that I’d have to sign on.

    • live green says:

      It can be really noble to cosign with your child or even fiance, but it can put you in a tough position. Say things didn’t work out and you were partial owner of a house with your fiance. It would put you in an extremely difficult position. You would either have to sell or pay the other person off to get full possession of the home. Saying that, I bought a house with my finance and everything turned out for the best. We both took on a risk at the time, even though we made it through just fine and now happily married.

  4. Aaron says:

    Why doesn’t she just cancel the credit card? I thought all credit card co-signers have the legal right to cancel. The debt will still need to be paid off but at least the card couldn’t be used.

    • Sandy says:

      The card has been cancelled and he is making the minimum payments, but it shows up on my credit report and a debt that belongs to me. this card was taken out in 1985, 3 children and 20+ years of marriage when he desided to end the marriage. The cc company won’t remove me because of his credit score. Just in case he faults on the payment they can come after me. I would have never thought of this when we were married.

      • Aaron says:

        Ah, I misunderstood the story. I thought he was still adding to the debt. Unfortunately nobody thinks about this stuff then they are in the middle of marriage. I know that if I were in a situation where cosigning with my wife was the only option I’d do it. It sounds like the only real option you have is to payoff the card since this guys is obviously going to drag it out for 30+ years w/ the minimum payments he’s making. It sucks but sometimes the cost of piece of mind is high.

  5. billsnider says:

    In my life I have seen many situations where a person cosigns and is stuck for the bill. I saw this in two cases where couples were to be mattied and in another i saw it with a nephew of a friend.

    Not a smart idea unless you are ready to swallow the consequences.

    bill Snider

  6. Mike Whaley says:

    This is a sad story. How can someone do it the right was and then be held hostage for the rest of their life. Somethings just don’t make sense, this is one of them.

  7. Glenn Lasher says:

    I have cosigned with my mother, out of her having a medical need. Even though it did come back to bite me, I still do not regret this move. I save my anger instead for this nation’s mind-blowing inability to provide meaningful medical coverage.

    • Shirley says:

      Co-signing for a parent with a medical need is indeed a horse of a different color. I can’t imagine anyone refusing to help a responsible parent when they are in need, particularly medical need.

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