Posts Tagged: ‘dangers of co-signing’

Debt Questions you may be Afraid to Ask

August 4, 2017 Posted by kingcade

Talking about debt can bring up all sorts of emotions, leaving some to worry in silence about their own debt or a family member’s finances.  Here some answers to some of the most common questions about debt.

Can I inherit my spouse’s or family member’s debt after they die?  This depends on the debt. The assets left behind after a death typically go towards paying off that individual’s debt.  After that runs out, the creditor typically suffers the loss.  Co-signers when it comes to student loans, mortgage debts and joint credit cards will likely be on the hook for any remaining balance.  Know the dangers co-signing a loan and make sure and carry enough life insurance to cover all of your debts.

Is there a limit to the amount of debt I can take on?  The answer is no, but it depends largely on the type of debt.  Lenders sometimes offer you more credit than you can pay back.  Think of a loan you would take out to start a new business or taking out a mortgage to purchase a new home.  Even if you qualify for the loan, be realistic about what you can afford to repay.

Can I be arrested for outstanding debt?  The answer is no.  The Fair Debt Collection Practices Act (FDCPA) bars debt collectors from harassing and threatening you with arrest or jail.  However, they can sue you for payment.  Know your rights when dealing with debt collectors and consult with an experienced bankruptcy attorney before receiving a court summons or being sued by a creditor.

If I file for bankruptcy, will ALL of my debt be erased?  Alimony and child support obligations cannot be erased in bankruptcy.  Student loans, certain tax debts and judgments against you can be difficult to get discharged as well.

Click here to read more on this story.

If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Co-signing a loan puts more than your name on the line

June 29, 2016 Posted by kingcade

Co-signing is an all too common practice, and gives you the opportunity to help another person.  However, this responsibility comes with great risk, and little reward.

For example, you might co-sign for a car you never drive, a house you never live in or even a student loan for someone else’s college education.  When you co-sign a loan, you essentially agree to repay the loan yourself.

A survey from CreditCards.com reveals the dangers of co-signing and why you SHOULD NOT do it.

  • 28 percent of co-signers saw a drop in their credit scores because the primary borrower paid late or not at all.
  • 38 percent of co-signers had to pay some or all of the loan payments because the primary person did not pay.
  • If your income is not high, you are more likely to be pulled into a co-signing nightmare. The survey found that 58 percent of co-signers who make less than $30,000 a year had to pay some or all of a credit card bill or loan they co-signed.
  • Most co-signing requests were for auto loans, followed by personal loans, student debt and then credit cards. About half of the people who co-signed were parents.

 

Here are some additional dangers of co-signing a loan.

  • You are not considered a backup borrower. You are equally responsible for the first payment to the last.
  • If the loan or credit card is not paid, the lender can start collection actions on you right away. Do not believe that lenders first go after the primary borrower and then the co-signer. Most likely, lenders will target “the person with the better potential to pay.”
  • If collection actions are pursued, you could end up paying late fees and even have your wages garnished.
  • Late payments and collection actions are reported on your credit report.
  • This may limit your ability to borrow because, as a co-signer, you are on the hook for the debt.
  • Even if the person you are co-signing for is responsible with money, you cannot predict what the future holds for his or her finances. What if the person becomes unemployed or unable to work?

As one consumer wrote, “I have told more than one relative that while I can guarantee their willingness to pay, I cannot guarantee their health or employment.”

Click here to read more on this story.

If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.