When you are asked to cosign for someone, you are being asked to take a risk that a professional lender would not take. If the primary borrower met the criteria for the loan, the lender would not have required a cosigner. Because of this, cosigning a loan is always a risky proposition.
If the primary borrower does not pay the amount owed for the loan, then the cosigner will be responsible for that loan and will be legally obligated to pay for it. If the situation becomes one where both the primary borrower and the cosigner cannot pay the loan, then it may ruin both individual's credit. Also, late charges/attorney fees/court costs may increase the amount owed if the lender decides to sue in order to collect the debt owed.
It should also be noted that a cosigner usually does not have any ownership rights to the property, but only "owns" the debt.
It is highly recommended that if you are asked to co-sign for anyone, the best answer is "NO" unless you are currently prepared to take responsibility for the debt yourself and you have a tremendous amount of trust in the person you are cosigning for.
If you have any questions relating to loans that you have cosigned for and are now responsible for contact an Orange County Bankruptcy Attorney at
1st California Law today!