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Debt Consolidation - Bill Consolidation
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Cosigning A Loan
Remember: When cosigning
a loan you are equally responsible for the repayment of the debt incurred.
Neither a borrower, nor a
lender be?
What would you do if a friend or relative asked
you to cosign a loan? Before you answer, make sure you understand what cosigning involves.
Under federal law, creditors are required to give you a notice that explains your
obligations. The cosigner’s notice states:
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You are being asked to guarantee this debt. Think carefully before you do. If the
borrower does not pay the debt, you will have to. Be sure you can afford to pay if you
have to, and that you want to accept this responsibility.
You may have to pay up to the full amount of the debt if the borrower does not pay. You
may also have to pay late fees or collection costs, which increase this amount.
The creditor can collect this debt from you without first trying to collect from the
borrower.* The creditor can use the same collection methods against you that can be used
against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever
in default, that fact may become a part of your credit record.
This notice is not the contract that makes you liable for the debt.
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* Depending on your state, this may not apply. If state law
forbids a creditor from collecting from a cosigner without first trying to collect from
the primary debtor, this sentence may be crossed out or omitted altogether.
Cosign a
Loan Continued
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