To cosign or not to cosign?  This the question. Over the years I have heard so many horror stories where people have either co-signed on a loan, apartment, line of credit, or rental car and then the individual who asked them to co-sign stopped paying. In all of the cases that I know about the person who asked the other to co-sign was a close family member. Also, in all cases, the person was pressured through guilt or obligation into co-signing because of the family relationship.

This presents an interesting challenge because the person’s emotional connection was leveraged to obtain the signature but the same relationship wasn’t respected when the person who took out the loan stopped paying. In many cases, the person who stopped paying never told the co-signer, so the co-signer was totally surprised when they received a call from a debt collector who then began to garnish their wages.

I’ve been asked a few times to co-sign on a loan, and I’ve always said no out of concern that the person may default and that it would end up being my liability. I actually had an ex who couldn’t rent a car because his mom took out credit cards in his name and ruined his credit. At the time, the rental companies required a credit card to rent, and he didn’t have a credit card. He tried to convince me to co-sign or rent the car for him, but I didn’t because I knew that if anything happened to the car I would be liable.

I know a couple of other people who co-signed on bank accounts that were opened by their parents but then the parent overdrew the account and now the child can no longer open a bank account until the hundreds and sometimes thousands of dollars in bank fees are paid off. I also know some people who either co-signed on apartments or who were roommates but didn’t have both parties’ names on the lease with their respective contributions. Needless to say, when someone stopped paying the rent or damaged the apartment and the co-signer or other roommate ended up getting their wages garnished to pay for damages or back rent.

I am not trying to scare you. I want to show you cases where co-signing has gone bad, so you can make an informed decision if you are approached to co-sign. Ask yourself:

• Can I really trust this person not just on good times, but if things go bad? Remember, if you co-sign you will be stuck with the liability so you need to think about how this person may act in a difficult situation.
• Can I afford the payments if the person does default?  If the answer is no, then you may want to rethink your decision.
• How will this impact my credit?  Depending on the type of loan that you co-sign on, it may be reported to the credit bureau as outstanding credit to you.

Please think about these questions the next time you are asked to co-sign. Be very careful if you do decide to go that route because it is extremely risky.

If you’re waiting for a sign that it’s time to make a change, consider this it. Money Therapy may be just what you need to break through your financial blocks and release your money guilt and shame. 

Aisha Taylor is a #1 Amazon Best Selling Author of the book “5+5 FNPhenomenal Ways to Save $100 This Week Without Killing Your Lifestyle”, and the Founder of FNPhenomenal (Frugal –n- Phenomenal). FNPhenomenal helps women to break the vicious cycle of making money, but not keeping it. FNPhenomenal provides education about money management, empowers women to take control of their lives, develop a healthier relationship with money, and pursue being phenomenal.

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