Co-signing a Loan Can Mean Debt Trouble for Chicago Residents
If you know what it feels like to be struggling with debt, chances are you don't want your loved ones to go through the same thing. So when someone close to you asks you to co-sign a loan, it makes sense to want to do your part.
But though it might seem to make sense for your friendship, it doesn't make sense for your finances, say Chicago bankruptcy attorneys. In the end, sharing that loan might mean the end of your relationship.
The biggest problem with co-signing for a friend or family member is that it doesn't seem like a big deal at the time. You think you're doing a simple favor. You're helping out a pal. You're being sympathetic. What you're forgetting is that you're entering a business transaction - regardless of your relationship with the other party.
Of course your friend might mean well, but neither one of you can predict the future. There's a good possibility that circumstances could arise to put the loan recipient in debt. And if you've ever been in debt, you know what it's like to have to pick and choose what bills to pay. Food and electricity will probably win out over loan payments - and when lenders come calling, you'll be liable, too. Do you really want to risk losing your house so you can help someone else buy one?
Sometimes the nicest thing you can do when asked to co-sign is just say no. Yes, at first your friend might be angry at your lack of support. But in the long run, you're saving the both of you from potential stress, financial ruin and an irreparable relationship.
In times like these, you have to look out for yourself and your immediate family first - at least financially. That means making wise decisions - and knowing when to seek help when you need it. If you or someone you know has so much debt that getting a new loan - or paying off an existing loan - is impossible, bankruptcy might offer a solution. Want to learn more about how bankruptcy can help lower your debt, protect your assets and improve your credit? Sign up for a free personal debt analysis with a bankruptcy attorney in Chicago.