Cosigners Should Be Prepared for the Worst
If someone has asked you to cosign a loan, you may be put on the spot when asked to answer; after all, it is a big decision that could affect you seriously later. This type of scenario is much more common for parents with older children who may have just moved out of the house, or adults who are having financial trouble a little later in their journey to independence, or those who may need a private student loan (which realistically, could be massive). You may not only be asked to cosign on a loan for a car, or an educational debt, but also living arrangements.
As a parent, you may be ready to help at any moment and delighted that they asked you. Most likely, you want to further your child’s progress and see them through to success at nearly any cost. Cosigning could cost you, however. And just as lenders are very calculating about assessing their risk, so should you, with as little emotion placed into the equation as possible. Your children may be in need, or another relative may be in need, but consider what could happen to you if they, who may potentially already be a bad financial risk, do not come through with payments. The best plan for a cosigner is to have the amount of money being signed off for already in a savings account, because it very well may be needed later.
As a cosigner, you should always look at the worst possible scenario. We all want to be optimistic for our children, and of course hope that they will have success in their jobs and be able to pay for that car, student loan, or rent in that nice new apartment complex; however, you must consider your own financial safety, especially as a parent who may be older with less time to be able to make up a financial disaster later. Keep in mind that your children may be getting a little bit older, but they have many years ahead of them to work and build up a nest egg. You may not have that luxury.
If a loan goes into default, the creditor or debt collection agency will launch aggressive action toward the initial debtor, which may include a collection lawsuit or default judgment. If the debt is not satisfied, though and they realize there’s little chance, they will come after you next. So, as a cosigner, you should be prepared for the worst—which could be the potential for wrecking your credit, being sued, and even a default judgment if you were not to handle a lawsuit properly upon its arrival to you.
If you are concerned about impending creditor lawsuits or fighting a default judgment, consult with an experienced law firm like Fitzgerald & Campbell, APLC as soon as possible. A solution can be found to help you through any of these issues, even if a judgment has already been granted.
Our attorneys have decades of experience in serving clients as they navigate through challenging financial situations, to include collection lawsuits, default judgments, and more. Let us review your case and discuss what would work best for you. We are here to help! Call us today for a free consultation at (855) 709-5788 or email us at email@example.com.
Posted in: Credit Card Debt