Friday, November 11, 2005

Co-signing a Note = Signing up for Trouble?

In a story probably as old as King Solomon's proverbs, ABC's Eileen Powell is asked about co-signing a note for a friend. She points out that the writer should ask the friend for information about the credit history and realize that their is a real risk of losing the friendship if the note is not repaid. Ms. Powell goes even further and says that even co-signing for relatives is a risky activity.

There probably are situations where co-signing might be justified, particularly by those who are both well-off and temperamentally able to handle the risk of not being repaid; the most significant of which would be co-signing a note for a child who has proven to be responsible to attend college. Nonetheless, both King Solomon and Ms. Powell are onto something here; co-signing should be done only under quite unusual circumstances.


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