Why you should never become a co-signer
“Dear Gershy:
I’m in a bit of a situation. I go to a synagogue and got to know the Rabbi there. I thought he was a wonderful man. As the weeks and months wen’t on, I learned more and more about him and respected him so much. Several months ago, the Rabbi explained to me that he was leasing a vehicle, and that the bank required a guarantor on the lease. I immediately volunteered to co-sign the car. Recently, I applied for a mortgage as I was in the market to finally buy a home after saving for years. I was shocked when the mortgage rep told me my credit score was 580. ‘Impossible’, I thought. I pay my bills on time and always have. I checked my score a few months prior at it was 770. What could have happened? When I checked the credit report I found a delinquency with Honda Financial (The Rabbi’s car!?). When I called the Rabbi to inquire about this, he informed me that he has some trouble making payments, and that he was too ashamed to tell me. My credit is now in the toilet and I can’t get a mortgage. Help!
Sincerely,
Danielle”
I can’t help Danielle. I tried. I called Honda and called the credit agencies and did everything I could and there was nothing that could be done (obviously her name is not really Danielle and that’s not his/her letter- no one writes me letters- but whatever). The point of the above is that you shouldn’t co-sign things. Ever (Reddit link, so clearly NSFW) Or, if you do, you should treat them like a business transaction because it could mean your financial life is essentially over for some time if things go south. And, by the way, the above is true but this could obviously also happen with a Reverend, a Buddhist, and Imam, etc. I’m an equal opportunity finger pointer.
Why you should never become a co-signer
We co-sign things for people that we love. You ask your mom to co-sign a loan for your super awesome boyfriend and things don’t go well. Mom does it because she loves you, but she’s not looking at it in the way a business transaction should be. Or, reverse the situation and you find out mom hasn’t paid the mortgage in a couple of months because YOLO and you’re on the hook. MSN Money HATES co-signing. Bankrate.com legit compares it to the plague. Apparently, God is not cool with co-signing either. And, uh oh if God decides to take your co-signor, as you still may be on the hook. Every Bankruptcy attorney I know hates it. It’s wonderful for business, but horrible for clients. I have filed countless Bankruptcies for individuals who did absolutely nothing wrong with the exception of cosigning a (1) Car (2) Student Loan (3) House (4) ATV (5) RV (6) Alpaca and other crazy things. These people had to file Chapter 7 and go through the process NOT because of something they did, but because they trusted or, let’s be real here, couldn’t say no to someone they loved. And it’s always someone you love and care about. You don’t see strangers coming up to you and asking you to cosign things. And you wouldn’t say yes if they did. But you would say yes if your family member asks you, because you feel wrong saying no. Well, say no. And run. These things can legitimately mess up your financial future. People discuss repayment plans and “putting things on paper”, but it’s fluff. If you co-sign for someone and they don’t make the payments, whatever “paper” you have is not going to save your credit. You may be able to sue that (broke) person, but it’ll do nothing for your prospects of buying a home. It certainly will not help when you see your credit cards get cancelled because your scores drop. So, unless it’s absolutely positively necessary to do this and you’re OK with breaking up over this the risks, you should not co-sign anything.