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Should I Cosign? Here Is the Truth About What God Says

Hidden Nuggets Series #102: “Do not be one of those who shakes hands in a pledge, one of those who is surety [ cosign ] for debts.” – Proverbs 22:26

If you’ve ever had a situation where a friend or family member asked you to cosign a loan you know it’s a tough spot to be in. On the one hand you want to help. But the idea of being responsible for someone’s debt has you a little squeamish.

cosignSay “No” and it seems like you don’t care.

Say “Yes” and you are opening yourself up to financial risk.

Maybe as you thought think about what to do, you should have considered asking this question: “What does God have to say about it? Would He want me to cosign for this loan?” It may never have occurred to you to seek advice from a higher power.

The truth is God talks a lot about money in the Bible. He even has advice about cosigning which really surprised me when I found it. For anyone, but especially people of faith, His advice is worth listening to.

God’s Advice on Whether to Cosign

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Surety: How to Get Out of a Cosigned Loan

The idea of becoming surety for a stranger, friend or family member has not been spoken highly of in the Bible. We have been warned about the potential dangers and risks involved in doing so. Despite these warnings, there will still be some people who think their situation is unique and choose to vouch for the debt obligation of someone else by cosigning for them. It is unfortunate that they would ignore this wisdom and put themselves at risk for financial and emotional harm.

So what do you do if you become surety for someone? Is there a way out if you regret your decision? Well again we turn to the wisest man who ever lived.

Deliver Yourself From a Cosigned Loan

In Proverbs 6:1-5, Solomon addresses this situation by saying,

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Surety: The Potential Costs of Cosigning a Loan

Any good professional financial planner would tell you their primary goal is to create financial security for their clients. They would organize your investments in such a way as to produce that desired outcome. They would also counsel you the best path to establishing financial security is to engage in wise personal behaviors. In other words, don’t do anything in the present to damage your financial picture and thus jeopardize a secure future.

The fact of the matter is, when you become surety (going into debt, cosigning) for another, it puts you at risk in the present. It is the risk you take that could have devastating affects on your long-term financial picture.

Words from Solomon on Surety

Solomon about surety often and he clearly did not think it a wise financial move.

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Surety: Do You Really Want to Cosign That Loan?

There is a curious money word in the Bible – found mostly in Proverbs – that needs some defining. It’s the word “surety.” Surety refers to the act (or promise) of a person to take on or assume the responsibility for the debt obligation of someone else if that person cannot repay their loan. In essence, you become the guarantor of the loan by being willing to provide this service.

This type of arrangement is most common when the lender of money has a question or some doubt the borrower may be able to repay the loan. So they will require a third party (you the guarantor) to step forward and legally enter into the borrowing contract. The lender does this to reduce their risk and, in some cases, this may actually lower the interest that is charged to the borrower.

An Example of Surety

So, for example, your son wants to buy a $8,000 car.

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