Cosigning a credit card or loan allows the bank to pursue you for payments when the other person cannot. Unless the other person can demonstrate that they can handle it alone, banks typically won’t allow you to remove your name. If you’ve cosigned for a loved one, removing your name will be difficult, but it is possible.
Get a Cosigner Release
Some loans have a clause or program to release co-signers from their duties if the individual who receives the credit can prove they are trustworthy by making a minimum amount of monthly payments. You can call the lender to find out if you can take part in a program like this, or scan the original documents to see if there’s anything in the fine print that would help you.
Refinance, Consolidate, or Sell the Asset
Borrowers can either refinance the loan in their name if they’re proven to be trustworthy or pay it off with a consolidation loan (whose payments won’t affect you). To make this change, the individual must have a good credit history and enough income to be able to make the loan’s new monthly payments. Once they’ve done this, you’re no longer the co-signer, and they are fully responsible.
If, on the other hand, the borrower is having trouble making payments, you can sell the asset (home or vehicle) to pay off the loan. You can check with a lawyer to make sure, but if your name is on the title, you can make the decision.
Removing Your Name from a Credit Card
The credit card issuer can have your name removed if the account has no balance. Otherwise, it must be paid off before making further changes. There are times when a creditor can transfer the bill to a new credit card in the other person’s name, but they must prove they have good credit. If they can open a ticket in their name, you can close the balance with your name on it. The issuer may also prevent the account from reopening to avoid further charges.
If the person does not have the option of closing the account or moving it to a different card, you may be stuck paying the balance yourself. In this case, you can call the issuer and ask them to place a freeze on the card to prevent anyone from using it. You may also get some of that compensation back if you file a claims case against the other individual later on.
If a loved one forged your signature on a loan, it creates a dilemma because you don’t want the consequences of their poor spending actions, but you don’t want to have them arrested either. The lender can remove your name if you report the forgery, or you can have the forger admit their crime with an affidavit. Since both are legally risky for your loved one, inform the lender immediately to avoid further trouble.
If you cannot remove your name, then pay the balance off with required payments. Be sure to check the payment status regularly and pay on time, because after 30 days of payment delinqueny, late fees will appear on your credit report.
People often regret cosigning after an individual doesn’t hold up their end of the bargain, resulting in late and even missed payments that affect your credit report as much as theirs. Heather Benveniste with Benveniste Law Offices can help provide much needed debt relief. If you’re facing repercussions from the lender after cosigning for a loan, Heather can engage in negotiations to help prevent legal action and settle on a repayment plan that’s most beneficial to you. Contact us today at 1-800-497-5358 for a free case evaluation.