Common Sense

Co-signing and Surety

Written by Jack Oosterveld

A 24-year old man, John, had just graduated from university. He had needed $14,000 in student loans but had already gotten a job working with the City of Edmonton. He was going to be making $27,000 a year and had come up with a schedule to pay back his student loans, move into his own apartment and make payments on a new Chevrolet Cavalier that he had been dreaming about since he was sixteen.

John went to the bank and showed them his plan and how he would be able to handle the car payments in addition to the rent and the repayment of his loans. To his surprise, the bank turned him down but told him that if he could find someone to co-sign the loan, he could get the money to buy the car.

He immediately went to his parents and showed them everything and convinced them to cosign the loan for him. His parents thought, "why not, we know he is responsible, he has thought out his plan and he needs to develop a credit rating before they will give him a loan anyway."

A week later, he was driving his new car, living the life that he had dreamed about when he first started university. For the next six months, everything went fine, he made all his payments, and was very responsible with his money. However, the city was forced to cut back its expenditures and the most recently hired employees were let go, of which John was one.

John was devastated. It was the first time that he had experienced being jobless. It took him three months to find another job and this time he was only making $18,000 a year. His savings had already been used up and this job did not afford him the ability to meet his car payments. When he started to default on them, the bank went immediately to his parents who began to make the $450 payments. They were not very wealthy and this extra strain was almost too much.

John began to feel pressure from his parents to make his own payments and so he stopped visiting as much as he used too. He did not need the extra guilt that they heaped on him. It was hard enough to feel good about himself without them on his back all the time.

What are some solutions to John's problems? What could he have done differently?

What does the Bible have to say about co-signing for someone else's debts?

Read 6:1-5; 11:15; 17:18; 20:16; 22:26-27; 27:13. The Bible is quite explicit when it says that co-signing is a bad thing. It says that if you have cosigned, that you should humble yourself and beg to be let go.

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