It is only natural for people in North Carolina to want to help others for whom they care to establish themselves financially. However, co-signing a loan may not only lead to a spoiled relationship but, in some cases, even Chapter 7 bankruptcy. If a person feels comfortable co-signing a loan, it is vital that he or she thoroughly studies the contract — including the fine print. It may be even better if an experienced attorney goes through it before it is signed.
It is not uncommon for a person to co-sign a loan for a girlfriend or boyfriend because their relationship is special and they intend to be together forever. Unfortunately, the reality is that many relationships fail sooner or later, but the responsibility of a co-signee remains intact. A man described the consequences of co-signing student loans for a girlfriend. After a 10-year relationship, they had an acrimonious break-up, and although his girlfriend continued paying the loan, it was mostly late, and he was the one who had to endure creditor harassment.
A man who felt sorry for a neighbor’s failure to secure a car loan agreed to co-sign a loan. The neighbor paid the loan, but she failed to pay the insurance premium. The man apparently signed the contract without reading it, and never realized that he was recorded as the co-owner of the vehicle because his credit score was higher. This made him responsible for all the fines.
It is often suggested that if a bank considers a person too high a risk to authorize a loan, this should be a red flag for friends or family that might be considering co-signing a loan. Any North Carolina resident whose financial stability is threatened by the consequences of co-signing for a loan may benefit from discussing the dilemma with an experienced bankruptcy attorney. There might be a remedy by which his or her name can be removed from the contract, or else, filing for Chapter 7 bankruptcy may be a suitable solution.