Cosigning

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What is cosigning and what does the Lord say about it?

Cosigning relates to debt. When a lender does not feel an individual is a safe enough risk for credit another person can cosign on the loan as a guarantor. Anytime you cosign, you become legally responsible for the debt of another. It is just as if you went to the bank, borrowed the money and gave it to your friend or relative who is asking you to cosign.

In effect, by cosigning, you promise to pay back the entire the loan if the borrower does not.

A Federal Trade Commission study found that 50 percent of those who cosigned for bank loans ended up making the payments. And 75 percent of those who cosigned for finance company loans ended up making the payments! Those are pretty good odds that if you cosign, you’ll pay.

Proverbs 22:26-27 vividly describes what can happen when the payments can’t be made. “Do not be among those who give pledges, among those who become guarantors for debts. If you have nothing with which to repay, why should he take your bed for under you?”

Fortunately, Scripture gives us clear direction concerning cosigning. Proverbs 17:18 reads, “It is poor judgment to co-sign a friend’s note, to become responsible for a neighbor’s debts” (NLT). The phrase “poor judgment” is literally translated “destitute of mind!” God wants us to avoid making this sort of pledge, event though it can feel kind-hearted. The risk is too high. So, please use sound judgment and never cosign a loan.

Cosigning for Children

Parents often cosign for their children’s first automobile or some other form of credit. However, parents should model for their children the importance of not cosigning and discourage them from using debt.

Instead, train them to plan ahead and save for the purchase of their first car.

What to do if you’ve already Cosigned

If you have already cosigned for a loan, the Scripture gives you advice. Proverbs 6:1-5 reads, “If you co-sign a loan for a friend or guarantee the debt of someone you hardly know—if you have trapped yourself by your agreement and are caught by what you said—quick, get out of it if you possibly can! You have placed yourself at your friend’s mercy. Now swallow your pride; go and beg to have your name erased. Don’t put it off. Do it now! Don’t rest until you do. Save yourself like a deer escaping from a hunter, like a bird fleeing from a net” (NLT).

In other words: Do whatever it takes to get out, quickly! Beg if you have to. That’s urgent counsel, isn’t it? But you can see how strongly the Lord feels about his type of high-risk debt. Don’t even go there!

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