Her lack of communication and honesty destroyed our friendship. She wasn’t forthcoming when she realized she was in trouble, and going forward she wasn’t honest about her ability to pay. Today, we barely speak unless it has to do with the house (which I’ve never even seen, as I live in Los Angeles while she and her house are in New Jersey).
I’m on the Road to Recovery
As it stands, she hasn’t made a mortgage payment in more than a year and owes almost $30,000. We owe this amount. Co-signing makes me just as liable. The house has been under contract for a short sale and hopefully we will close soon (although I found out only three weeks before closing that she neglected to pay another $25,000 in outstanding dues, so who knows what will happen now). Mistake number four was not creating any type of contract that outlined our agreement.
I wouldn’t recommend co-signing on a stick of gum for anyone after going through this. It is more trouble than it’s worth. If the friendship has to end because your friend insists that you co-sign, at least you still have your credit.
All is not lost for me. In order to bring up my credit score, I’ve been focused on paying down my credit card bills and student loans. For the last two years, I’ve used lump sums of my tax return to pay off my credit cards. In effect, I’m decreasing my debt to income ratio and showing that I am able to keep up with my obligations on time.
My credit score has inched up to 698. I’ve paid off two cards in the past two years. I have one more to go, plus my student loans, and then I’m done! That has been the most exhilarating part of this journey. I’m on the road to becoming debt-free (except for my own mortgage).
It’s also forced me to operate more on a cash-only basis because I have limited credit, which has the side benefit of helping me budget better and be smarter with how I spend my money. I don’t have the credit resources I used to have in case of emergencies.
It’s also prompted me to have honest conversations about credit and our responsibility with my daughter. It’s not that my parents never cautioned me about co-signing for someone, it’s just that I never thought the worst case scenario could happen to me.
(When talking to your children about money, keep from making these mistakes.)
I’ve learned the lesson that you never want to put your financial livelihood in someone else’s hands. And when you co-sign, that’s exactly what you do.
Sibylla Nash is a freelance writer and author of novels “Bumped,” “DreamCity” and more.