Cosigning a Loan
What would you do if a friend or relative asked you to cosign a loan? Before you answer, make sure you understand what cosigning involves. Under federal law, creditors are required to give you a notice that explains your obligations. The cosigner's notice states:
* Laws in your state may forbid a creditor from collecting from a cosigner without first trying to collect from the primary debtor.
Cosigners Often Pay
In most states, if you cosign and your friend or relative misses a payment, the lender can immediately collect from you without first pursuing the borrower. In addition, the amount you owe may be increased by late charges or by attorneys fees if the lender decides to sue to collect. If the lender wins the case, your wages and property may be taken.
If You Do Cosign
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This document was written in March 1997 by the FTC.