Co-Signing/ Surety

Several years ago I received a phone call from a woman who indicated that the bank had just taken a significant portion of her and her husband’s retirement fund to pay off a loan for which they had cosigned with their son.

Statistics demonstrate that in more than 50 percent of instances when someone has co-signed, it is the cosigner, not the borrower, who ends up paying the loan. If you have already cosigned for a loan, I strongly recommend that you take the advice given by God to do everything possible to free yourself from the financial obligation related to cosigning.

God’s Word warns of the dangers of signing surety, which includes a situation in which a company owner gives a personal guarantee for the company’s debt.

The issue of surety (guaranteeing payment of a debt for another) arises when one takes on a financial obligation without a certain way to pay. When the owner of a company gives a personal guarantee in regard to the company’s debt, that person assumes that the company will be profitable enough and have sufficient cash flow to service the debt—without the debt falling back onto the personal guarantor.