How to Be Removed From A Financial Obligation as a Cosigner

img-3Once upon a time, you were being an amazing friend, parent, spouse, or whatever the case may be and you cosigned a loan to help them out. It was a nice thing to do at the time.

However now, you are estranged, or the person you co-signed for isn’t making the payments and you don’t want to be on their loan anymore.

Or perhaps you need a loan but your lender says your debt-to-income ratio is too high because of the loan you co-signed for and you won’t be able to get approved until it’s paid off.

Now you need to figure out how to be removed from being a co-signer on the debt.  Is it easy? Can it be done? Here is the information you need.

What are the Responsibilities of a Co-signer

As a cosigner, you have agreed to be responsible for someone else’s debt if they are not able to pay.  If the primary loan holder doesn’t make payments, or defaults on the loan,  it is now your responsibility to handle it as the cosigner.

That is what you agreed to.

So when you want to no longer be part of that there are steps that need to be taken.

How to Get Removed from being a co-signer

img-4If it’s a CREDIT CARD, this may be easy. The initial borrower should see if they are able to now get a credit card in their own name with a 0% balance transfer offer. Once they transfer the balance to the new card (that doesn’t have your name on it), they can go ahead and close out the other card, thereby letting you off the hook.

Also, you can just ask the issuer if you can be removed, especially if there is no balance on the credit card.

For LOANS, being removed is highly dependent on on-time payments and a credit check because the initial borrower does have to be financially able to handle the loan on their own. You can also look into refinancing or consolidating; because that will allow the borrower to get a new loan (which is what this entails) in order to get everything in just their name.

When it comes to HOUSING that’s a whole other ballgame as you and the tenant have to speak with the landlord or agency that holds the apartment and also they might not actually be able to remove you until the lease is up. At that time you can refuse to be a cosigner which will remove you from that obligation.

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Conclusion

Now you can’t force anyone to do this. If you are a cosigner, you initially signed on for the long haul, until the debt is free and clear and paid off, or you pay it off, whichever comes first.

Hopefully you have considered this before you signed and you believe the person will take care of the payments without affecting your credit down the line. In the future, you just want to remember that co-singing, while it may help the person you are doing it for at the current moment, can be a recipe for disaster if you are forced to pay off the debt because they can’t.

 

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Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

2 Comments
  1. I personally don’t think its a good idea to be a cosigner for someone else unless the person is a close relative that one can take his or her responsibility. For example I can cosign a loan for my younger sister and even if she defaults and I have to pay up I will take it as part of my responsibility towards her, but apart from such I can not be a cosigner for anyone else.

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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