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Co-Signing: Am I Responsible for My Spouse’s Debt?

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Advice for Debt-Help® in Edmonton

Are you considering co-signing for a spouse to purchase a new car or home? Co-signing is a popular way for individuals with a good credit history to assist someone without a good history. This is a frequent request among close family and friends because there needs to be a very high level of trust to enter into this type of financial relationship.
You might have mixed feelings and thoughts about the wisdom of co-signing for another individual. When you do not understand how co-signing works and what the implications might be, it makes sense for you to be cautious as to whether you should help out in this way.
You need to make the best choice for you and your financial situation when considering co-signing for another person.
Consider whether or not you could afford to ‘give’ or ‘donate’ the funds requested by the borrower since the worse possible scenario attached to your co-signing on their loan would be to pay for the debt in full if your fellow signatory ceased to make payments on the loan.  Further, if it is a secured loan, you may have no access to the collateral if the borrower stops paying but keeps the collateral.
If asked to co-sign for a spouse, family member or friend, the only advantage to you, the co-signor, is the feeling of maybe helping out the borrower concerned.  This also becomes a risk.

  • You are responsible if the other party does not pay. You might think of it this way, the only reason your co-signee could get the loan is because of If they stop making any payments, you are still required to make them.
  • This may hinder your ability to get another loan in the future. Making it possible for someone else to get a loan can make it harder for you to get one in the future. While you may not think you need one now, life’s circumstances change, and often without warning. You may need a loan in the months or years ahead.
  • You may need to keep track of the payments. Even if your spouse/friend/relative claims they are making the payments, it is a good idea to check with the loan company yourself. Failing to do so can end up with you receiving collection calls or your own poor credit rating.
  • Never co-sign if you feel pressured, obligated, bullied. It matters not what their reasons are for wanting/needing a loan on which you are requested to co-sign.  What matters is your financial well-being now and in the future. 
  • Always consider whether or not you can afford to pay the loan back, in full, if your borrower defaulted.
  • Consider your ability to repay from future earnings if you had to pay back the loan in full.
  • Consider that it is better, after due consideration of your own financial situation, to say ‘no’ to the request than to live with the fallout of a relative or friend unwilling or unable to pay on the loan as promised. 
  • Lastly, re-consider co-signing and going on title relative to a mortgage where you will not live in the property or make any payments. This may be the precursor to a ‘mortgage fraud’ which will come back to haunt you if the property goes into foreclosure.

Contact a Licensed Insolvency Trustee in Edmonton for Co-Signing Advice and Further Information

Are you thinking of co-signing for someone or have you co-signed for your spouse who has not kept up their payments? Your Licensed Insolvency Trustee in Edmonton can help with advice, guidance, and solutions for people dealing with these financial issues. We take pride in our ability to help you successfully work your way through and out of personal or business related financial matters.
For advice on dealing with debt problems in the Edmonton region and beyond, schedule a free initial consultation with the professionals at A. C. Waring & Associates Inc. Call our office toll-free at 1-800-463-3328 or 780-424-9944 with your questions and concerns regarding debt management and debt solutions.
 A.C. Waring & Associates Inc.
“The Debt Solutions People”®

Written by Arthur Waring

Arthur earned his Bachelor of Arts from the University of Western Ontario before earning a Bachelor of Commerce from the University of Windsor. During university, he also participated in a French immersion program in Trois Pistol, Quebec, and has been employed for several national firms over the years.

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