Banks or other financial institutions will request that a loan be co-signed if the borrower has insufficient income to qualify for the loan or has a limited or poor credit history. A co-signor is legally responsible for repayment of the loan where the primary borrower defaults on the loan payments and is unable to repay the loan. Furthermore, the co-signor’s credit rating will be negatively impacted where the primary borrower is late in making the monthly loan payments.
As a general rule, an individual should never co-sign a loan unless they are prepared and financially capable of repaying the loan in full.
If you have become responsible for the repayment of a loan you co-signed and are unable to maintain your existing debt obligations plus repay the loan, you should contact a Faber Trustee to review your options and discuss a consumer proposal or personal bankruptcy debt restructuring plan.