If the account goes unpaid for long enough, the lender could hire a collection agency to help them seek payment. The debt collector or lender may choose to sue you as the cosigner for the unpaid balance, causing you to rack up thousands in attorney fees and court costs on top of the debt that's owed.
The default will go on your credit report as well as the primary borrower's, and the lender can sue both you and the primary borrower to collect on the debt.
Your best option to get your name off a large cosigned loan is to have the person who's using the money refinance the loan without your name on the new loan. Another option is to help the borrower improve their credit history. You can ask the person using the money to make extra payments to pay off the loan faster.
The short answer is no – you cannot go to jail for co-signing a bond. However, there may be other consequences if you fail to uphold your obligations as a cosigner. Depending on the state and local laws where the bond was issued, you may owe civil damages or interest fees.
If you're the primary borrower on a debt, your cosigner can take you to court for: Recovery of money paid: they can sue you to recover the money they've paid towards the loan. Fraud: they can sue you if you signed their name to the loan without their permission.
Co-signing means promising to pay back a borrower's loan if the borrower fails to pay. You have the responsibility of repaying the debt, but you don't have any right to use the loan proceeds. Read: Best Personal Loans.
SUE THE ORIGINAL BORROWER.
You can file an action in small claims court (in some states such as Georgia this is the Magistrate's Court) to recover any amount you have to pay on the borrower's debt, plus court costs. If you succeed, you may be able to recover some or all of your loss.
Being a co-signer doesn't give you rights to the property, car or other security that the loan is paying for. You are the financial guarantor, meaning you must make sure the loan gets paid if the primary borrower fails to do so.
Additionally, the co-signer may need to pay attorney fees if legal action is required. Lenders can garnish the wages of co-signers.
Acting as a co-signer can have serious financial consequences. First, co-signers assume legal responsibility for a debt. So, if the primary borrower is unable to pay as agreed, the co-signer may have to pay the full amount of what's owed. Second, a co-signed loan will appear on the co-signer's credit reports.
Yes, you can sue the person you co-signed for if they don't make the payments they promised to make. You may be able to get a judgment against them in court, but it could be hard to collect on that money, since they didn't pay the debt in the first place.
Having a co-signer on the loan will help the primary borrower build their credit score (as long as they continue to make on-time payments). It could also help the co-signer build their credit score and credit history, if the primary borrower makes on-time payments throughout the course of the loan.
If you co-sign, you are responsible for the entire debt. This means that you will have to pay the full amount if the other person doesn't pay, even if you did not receive the goods or services. If the other person does not pay the loan, you can be sued and your wages and property may be taken.
When you're released as the cosigner, you're no longer legally liable for repayment. In addition, you don't have to worry about the potential damage to your credit if your son falls behind on payments, and you're less likely to be denied future loans based on the amount of debt owed on the student loan.
You will owe more debt: Your debt could also increase since the consignee's debt will appear on your credit report. The amount of debt that you currently owe will increase and will be added to the "amounts owed" portion of your credit score.
It's important to remember that the co-signer has no rights under the mortgage, only obligations. Even if the primary is no longer making payments, the co-signer's only “right” is to make the payments themselves or allow the foreclosure to proceed.
For example, if you're unable to make your car payments, your co-signer is responsible for repaying the loan, even if they've never driven your vehicle. In addition, if you pay late or default on the loan, both your credit and your co-signer's credit could be negatively affected.
The primary responsibility of a co-signer is to repay the debt if the borrower defaults. You may also become responsible for any penalties and late fees, depending on the borrower's monthly payment history.
If the other party stops making payments, as co-owner, you can take possession of the property. This is not the case as a co-signer. Remember that a co-signer is not on the title of the property and cannot take ownership of it.
If the borrower forged your signature, or if they committed fraud to enforce you to sign the loan contract, you can sue both the lender and the primary borrower to have your name removed. However, you'll need unquestionable proof that you did not willingly consent to cosign the loan.
“Do not be one who shakes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you.” – Proverbs 22:26-27. “Whoever puts up security for a stranger will surely suffer, but whoever refuses to shake hands in pledge is safe.” – Proverbs 11:15.
Co-signing means you are responsible for covering payments if the main borrower cannot, but you do not have any legal rights to the car. Co-owning means both parties have equal ownership and financial responsibility for the car.
Normally, a cosigner will have to stay on the mortgage for a minimum of one year. From my experience, normally a cosigner will stay on a mortgage for several years.
Option #1: Get a Cosigner Release
If you cosigned for a loan, one of the quickest routes out is to apply to the lender for a cosigner release. This lets the cosigner off the hook, so that only the primary borrower is the one listed on the loan going forward. It's not quite so simple, however.