DON’T CO-SIGN
My son, if you have put up security for your neighbor, if you have shaken hands in pledge for a stranger, you have been trapped by what you said, ensnared by the words of your mouth. So do this, my son, to free yourself, since you have fallen into your neighbor’s hands: Go—to the point of exhaustion— and give your neighbor no rest! Allow no sleep to your eyes, no slumber to your eyelids. Free yourself, like a gazelle from the hand of the hunter, like a bird from the snare of the fowler. Proverbs 6:1-5 New International Version (NIV)
CO-SIGN is the act of signing for another person’s debt and becoming legally obligated to make payment should the debtor default and not repay the obligation. You’d think…“Who’d want to do that, Christian or not?” However, I’m quickly reminded of a time when I asked my mother to co-sign a loan for me to obtain a vehicle. She told me no. I was offended and resented the fact that she wouldn’t help me. She always referenced the bible about giving and helping the poor; surely this would fall into that category right??? Making a decision to co-sign for another individual is so difficult because the person making the request is usually in a position of need…but is your help the thing that they really need the most?
Let’s go back to the story about the vehicle loan. I had to provide a larger down payment to secure the loan without a co-signer. My interest rate was 24.99% (extremely high) due to poor credit and the monthly car note took almost one whole pay check. All that money could have been saved if mom had only said “yes”. Well, not even half way into the 60 month term life happened. I could no longer pay and the car was repossessed. My mom would’ve been stuck with my debt if she had co-signed for me. What’s worse, if she wasn’t able to pay both of us would have been dodging creditors and both of our credit histories would’ve been negatively impacted. 
I guess mom knew better…
The bible warns us not only against taking on debt for ourselves, but also against taking on debt for others. Co-signing is a promise to the lender, but also to the borrower that you will not let their possessions be taken; you have their back. However, if you can’t guarantee that promise then you are lying to yourself, the borrower and the lender. “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 22:26-17, NIV)
When a person co-signs they become a slave not only to the lender, but also to their neighbor. The co-signer willingly hands over power to their neighbor for their reputation (credit), assets (what will be used to repay the debt) and livelihood (some employers will not hire you because of negative credit history). During Biblical times the co-signer could even lose their freedom!
Whoever puts up security for a stranger will surely suffer, but whoever refuses to shake hands in pledge is safe. (Proverbs 11:15 NIV).
If your family or friends need a co-signer it’s probably because they did not manage their other debts appropriately. There is a high risk that they will default again….only this time dragging you down with them. One who has no sense shakes hands in pledge and puts up security for a neighbor. (Proverbs 17:18)
So, what do you do when your friend or neighbor is in need and asks you to co-sign? Explain that it is too much of a risk; ask the Lord for the words to say. Help them by exploring other financial options and resources available, or by creating a budget, goals and savings plan. Have an honest conversation about why they need a co-signer in the first place. Pray with them about their circumstances. They may not like the answer and may take offense, but at least “your very bed will not be snatched from under you”.
If you have already co-signed for someone explore every option to amend the contract and come from under that debt obligation. Do not feel guilty for following the advice of the word. For more tips on co-signing check out 6 ways to get removed as a co-signer.
https://www.nerdwallet.com/blog/credit-cards/get-removed-from-cosigned-credit-card-loan/
Crystal
