We talk to a number of people who regret signing on the dotted line for their sister, best friend, boyfriend...... If they had just listened to Judge Judy in the first place, they would not be in this position. You should NEVER co-sign a loan for someoen unless you are married to them! That being said, so many people get talked into co-signing a loan and regret it later.
What does co-signing a loan actually mean?
Co-signing a loan basically makes you just as responsible for repaying it as the party actually taking the loan out in the first place. For many consumers, that seems feasible. After all, the only people asking you to co-sign a loan are either family members or close friends; you’re not gonna co-sign a loan for any regular Joe.
But, as is often the case, stuff happens and your friend or family member can’t afford to pay the loan off, leaving you holding the bill all by yourself. So how do you get out of it?
Is it possible to remove yourself from a co-signed loan?
As a wise Homer once said to his wife Marge, “Weaseling out of things is important to learn. It’s what separates us from the animals, except the weasel.” While we certainly don’t condone weaseling out of your financial obligations, we certainly understand the feeling of buyer’s remorse that comes with co-signing a loan.
Banks and other financial institutions typically don’t let co-signers off the hook unless the other signer can demonstrate he has the funds to pay back the loan on his own. Since that doesn’t happen often (why would they ask you to co-sign in the first place?), here are three ways to remove yourself from a co-signed loan:
#1 Time off for good behavior
Some loan programs will release your obligation to the loan as a co-signer if the other person is able to make their payments on time over a set period of time (usually about 2 years).
#2 Have them refinance it
Assuming your buddy has a good credit history on their own and has enough income to make the payments, you can try and get them to refinance the loan in their name. The account may still show up on your credit report, but it should be listed as either closed or paid in full.
#3 Sell, sell, sell!!
Did your friend or favorite second cousin ask to take out the loan for a new car or house? If so, and they’ve fallen behind on the payments, you can certainly try selling the car or home to help with the payments – assuming your name is on the title.
Hopefully you can use these tips to get yourself removed from a co-signed loan. If you need more help, one of our Debt Solutions Specialists can help. 1-877-492-4109