Beware the dangers of co-signing loans Published June 28, 2007 By 436th AW Legal Office DOVER AIR FORCE BASE, Del. -- What would you do if a friend or relative asked you to co-sign a loan? It's easy to say yes, but your signature means a lot more than a simple 'vote of confidence' co-signing is serious business. Some studies show that three out of four co-signers of finance company loans are asked to help repay the loan. That should not surprise you. When you are asked to co-sign, you are being asked to take a risk that a professional lender will not make. Think about it. The lender would not need a co-signer if the borrower was a good risk. Don't be pressured into co-signing, consider your decision carefully because it may not be a good idea. If you do co-sign and your friend or relative misses a payment, the lender can collect from you right away without pursuing the borrower first, and the amount you owe may be increased - by late charges or legal fees - if the lender decides to sue to collect. Then if the lender wins the case, he or she may be able to take your wages and property. Despite these risks, there may be times when you want to co-sign a loan. Perhaps your son or daughter needs a first loan, or a close friend is facing court action or otherwise needs your help. Below is a 'Notice to Co-signers' - The Federal Trade Commission requires that all co-signers be given this notice: 'You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn't pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility. You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount. The creditor can collect this debt from you without first trying to collect from the borrower. The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, the fact may become part of your credit record. This notice is not the contract that makes you liable for the debt.' For more information please contact the Legal Office at 677-3300.