Co-signing a Loan Can Bankrupt Friendships and Leave You in Debt
A friend in need is a friend indeed, according to the old adage. But sometimes the best way to help your friends is by not helping them at all - at least when it comes to co-signing a loan.
Sure, it can be tempting to help a friend borrow money they need. But what's good for your soul can spell disaster for your bank account, explain Atlanta bankruptcy attorneys.
Co-signing for friends or family might seem like a casual favor, but you've got to remember that it's also a legal business transaction. You're putting your name - and therefore your own money, assets and credit score - on the line.
You might have good reason to trust your loved one. But the problem is, neither of you has a crystal ball. Circumstances might change in the future. Something could come up to prevent - or at least delay - payments on that loan. Unfortunately, banks won't care about your good intentions. They won't care that you weren't the one responsible for making loan payments. If your name is on the loan, they're going to go after you as well as they try to recoup their money.
If you truly want to be helpful, your best bet may be to not get involved in the first place. Sure, you risk disappointing or even angering your pal or relative. But chances are they'll get over it. On the other hand, if you go ahead with the loan you risk ruining your credit, your good name and your relationship.
It might sound cold, but in tough economic times it's every man - or woman - for themselves, at least when it comes to money. There are other ways to show support besides getting involved financially. For instance, why not help your cash-strapped loved ones improve their finances, so they can get a loan on their own? Bankruptcy is one of the most effective ways to regain control over debt - and maybe even eliminate it completely. Find out for free if bankruptcy can help you and yours when you sign up for a complimentary personal debt analysis with a bankruptcy attorney in Atlanta. Unlike co-signing, there are no strings attached.