I have been helping people deep in debt to get a fresh start in bankruptcy for over 18 years now, and my clients most often find themselves in financial straits due to out-of-control credit card debt, medical bills (whether they have health insurance or not, which is another story!), job loss, divorce, and the like.  Usually it is because of debts they incurred themselves and could not repay.  However, there is another way to get into financial trouble, and it is one many people don't think about: co-signing for someone else's debt.

As was recently observed on an excellent bankruptcy site, the Bankruptcy Law Network, "cosigning is not a character reference , [nor is it] . . . a vote of confidence that you think your friend has the ability to pay the debt."  Far from it; you are agreeing to pay the debt if they do not. This should give you very serious pause before you sign on the dotted line.  Ask yourself these questions:

  • What do you know of this person?
  • Is he/she in good financial shape?
  • Is he/she, a mature, responsible person?  They had better be, because you are putting your own wallet (and credit rating) on the line if they are not.

Asking you to cosign on a loan or other type of debt is asking a lot.  If you have the slightest doubt, don't do it. It goes back to the old adage about saving a drowning man; don't try it if you are just going to be dragged down with him.  Sometimes it is better to lose a friend than to risk losing your financial future.

Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.