Proverbs 17:18
Co-signing on a loan can be very dangerous.
You take on the other person’s debt. If you are going to do this, then upfront
you need to just assume you owe the whole amount yourself. Include their amount
in your monthly budget. And if they pay the debt, then you get a blessing. If
not, then you are not taken by surprise. You can afford what you have taken on.
Even
if you know the people very well, even relatives (perhaps the worst offenders),
co-signing is dangerous. It is dangerous to relationships. Hurt feelings,
lawsuits, gunfights, thermonuclear wars all result from co-signing! Well, maybe
not the thermonuclear wars!
Our
proverb says that if you co-sign (which is what shaking hands is pledge for a
neighbor is in modern terms), then you are someone who has no sense. Bail bondsmen
do this for a living. And they have bounty hunters to collect on the debt.
Part
of your evaluation process should be an evaluation of their financial
responsibility. If they are not using their own money responsibly, why do you
think they will use your money responsibly? If they have problems allowing your
oversight of their finances during the evaluation phase, even some suggestions
about how they could save some money, then definitely don’t co-sign. Humility
must be part of the process.
Does
this mean you should never co-sign? I personally think it is much better to
just offer to pay the debt yourself, as a gift. They have no obligation, and
you feel no sense of holding it over them. You have assumed in your
calculations that you can afford to pay the debt if they default. Why not just
pay the debt? There will be no disappointment on your part, and a big sense of
gratitude on their part. If there isn’t gratitude, then I would not do it at
all.
The result might be the opportunity for them
to learn generosity by seeing your example. Maybe they would pass along this
kindness to someone else in the future.
Jesus
co-signed our debt. He took on what was not His. He paid the full price for us.
Should we do any less?