For many people the only opportunity to take a loan is to get an aid of cosigner. Usually those are close friends or relatives, but do they really understand that in case the borrower won’t manage to repay the loan the cosigner will risk with his credit history?
Although the credit history can be restored if you apply for one of top 4 secure credit cards provided to people with no credit or bad credit. Some of them do not require a credit check, employment verifications and can even be obtained by someone with who has filed for bankruptcy.
What If the Borrower Doesn’t Manage to Pay?
The cosigned loan has one main consequence — if the borrower for any reason isn’t able to pay for the loan, the bank will collect his debt from the cosigner. At the same time the cosigner is obliged to be responsible also for return of all the sum – with commissions and fees and also to compensate legal costs of bank (state duty). This is possible due to the terms of the loan agreement cosigner signs.
In practice it turns out that at solidary collection of debt is done anyway no matter what – till there is any property both for cosigner and borrower. It turns out that in case borrower has no property or oficial income registered everything will be paid by the cosigner. Bailiffs have the right to collect the property from the cosigner and to hold part of his salary and to forbid trip abroad.
An Instruction to Act On
If you after all have signed the contract and your borrower has ceased to pay, we recommend the following actions.
- If you consider that the court has ignored some of your arguments and has incorrectly estimated all facts of the case, you have the right within 1 month from the date of decision to appeal against the superior court (to file the appeal). At submission of the complaint the decision will come into force only after consideration of the case in superior court.
- Sometimes the judgment about collection of debt is passed without participation of cosigner and the borrower. Such a judgement can be cancelled in the same court and if nothing turns out, there is always a possibility of submission of the appeal in the general order. Consider that the appeal of the judgment about collection of debt, as a rule, makes sense only in exceptional cases. For example, if you didn’t sign any contracts of guarantee.
You should be very careful when going for cosigned loan – you take a huge risk especially if you are barely capable of paying your own loans.
No matter how close the person is, make sure you have provided all possible actions to protect yourself from bankruptcy before signing the agreement.