You are most likely suffering from co-signers regret if you have come to the conclusion that helping a friend or family member secure a loan was not a wise decision. It won’t be simple to get your name removed from a debt that you co-signed. It is probable that this is not even achievable for some of the debts.
When you co-sign for someone else on a credit card or loan, you are essentially telling the bank that you are willing to make payments even if the other person doesn’t. It also indicates that the bank can come after you for payment even in the event that the other party declares bankruptcy or passes away before the obligation is paid off.
When you co-sign for a loan, you are taking on the same level of responsibility for the repayment of the loan as if it were yours alone.
Your name won’t be removed from a co-signed debt unless the other person has proved that they are capable of handling the loan on their own, which is the normal rule that lenders follow.
If the other borrower had demonstrated their capability from the very beginning, you would never have been asked to co-sign on the loan. In the event that circumstances have evolved after that time, the lending institution will undoubtedly want evidence.
Taking Your Name Off of a Co-Signed Loan Application
You may follow a few procedures in order to get your name removed from a loan that you co-signed if you want to.
Obtain a release from the co-signer. After a predetermined number of consecutively on-time payments have been made toward a loan, there is a procedure that can relieve a co-signer from their duty to the debt.
For example, student loan borrowers with Sallie Mae can petition for the release of their co-signer after making payments on the loan for a full year, provided that the borrower’s credit and other standards are met.
Look over the paperwork related to your loan to determine whether or not it has any kind of program attached to it. You could also phone the lender and inquire as to whether or not something similar to this pertains to your loan.
Refinance or consolidate. One further alternative would be to request from the other borrower that they refinance the loan into their own name. To be eligible for a refinance, the borrower needs to have a strong credit history and sufficient income to cover the monthly payments on the new loan.
Consolidation is a strategy that is frequently utilized for student loans. A borrower who is eligible for the consolidation loan might use the money from it to pay off the loan that you co-signed.
You will see the original co-signed loan shown on your credit report. However, it should indicate that the account has been terminated and that the balance has been paid in full. If your name is not listed on the consolidation loan, any payments made or nonpayments made on the loan will not have any impact on you.
You should sell the asset and use the money to pay off the loan. If you co-signed on a loan for a property or automobile, and the other person isn’t making the payments as they are required to be made, you may be able to sell the asset and use the money to pay off the loan. If you want to sell the property to another person, the buyer’s name needs to be on the title.
Getting Your Name Removed From Your Credit Card Account
When there is no outstanding amount on a credit card, the company that issued the card may be more ready to remove your name from the account. However, if there is a balance on the account, you will not be able to make any of the following adjustments to the account until the balance has been paid in full:
Move the remaining funds here. It’s possible that the other borrower can move the balance over to a credit card that’s exclusively in their name if they want to. After the balance has been moved, the credit card should be canceled so that it can no longer be used and new charges cannot be added to the account.
You have the option of requesting that the company that issued your credit card make a notation in its database saying that the credit card account should not be reopened. This will prevent any further purchases from being made using the card.
You are responsible for paying down the balance. Paying off a credit card balance that you did not make and that you did not benefit from will not be a joyful experience. Paying out the bill, on the other hand, is preferable to letting your credit rating suffer and having debt collectors follow you around. You have the option of either closing the account or requesting that the issuer of the credit card freeze the credit limit. This will prevent any further charges from being made to the card, which is especially helpful if you are working to pay off the existing balance.
For example, Capital One offers a phone number that customers can contact to request these services, but the company emphasizes that joint account holders cannot withdraw funds.
Taking Your Name Off of a Fake Loan Application
When someone you care about forges your signature on a loan application, it puts you in a difficult situation.
You don’t want to be held responsible for a choice that you didn’t make, but you also don’t want someone you care about to be arrested for forgery or fraud because you decided to blow the whistle on the situation in order to clear your name. This is something that could happen if you decide to do so.
Experian, one of the three credit bureaus, suggests that if a fake loan is involved, a case of identity theft be filed with the Federal Trade Commission.
If you do not notify the authorities about the forgery or provide the lender with a written affidavit that includes the forger’s admission of guilt, the lender will not remove your name from the loan that was forged in your name. Both of them put the person you care about in danger of facing legal repercussions.
If you do not make the lender aware of the forged document as soon as you discover it, your silence may be construed as an acknowledgment that the document was forged. In a nutshell, you will be responsible for repaying the debt unless you are willing to denounce the criminal activity of a loved one.
Safeguarding Your Credit
If you are unable to convince the creditor to remove your name from a co-signed loan or credit card balance, your ideal way is to at least transact minimum payments until the balance is paid off or until the other borrower can get the account in their own name. If you are unable to convince the creditor to remove your name from the loan or credit card balance, your best bet is to keep up the minimum payments.
Get into the habit of checking the payment status frequently, particularly in the days leading up to the due date, on the due date, and the day after the due date. Co-signing may not become an issue unless the other person is not keeping up with the payments, so it is important to get into this habit. You shouldn’t wait too long because late payments are reported to credit bureaus after a period of 30 days has passed.
Questions That Are Typically Asked (FAQs)
Who is eligible to co-sign a loan?
In most cases, a co-signer can be anyone who has a strong credit score and the potential to repay the loan that you are applying for. It is recommended that the co-signer be a parent or another close relative. However, it is not required that the co-signer be a member of the same family.
How can I determine if the loan that I co-signed has been defaulted on?
If you have co-signed on a loan, it is especially important that you keep a close eye on your credit report for any warning signs that might appear there. It is possible for a negative mark to appear on your credit record if the individual with whom you co-signed the loan is more than 30 days past due on their payments.
What happens if the main owner of a loan co-signed by someone else files for bankruptcy?
When an individual submits a bankruptcy petition, any co-signers on the debts that person owes may or may not be protected, depending on the form of bankruptcy that was filed. Co-signers are still responsible for the debt if the debtor files for bankruptcy under Chapter 7.
However, if the debtor files for bankruptcy under Chapter 13, the co-signer is shielded from liability at least temporarily during the initial stay while the bankruptcy case is evaluated. If the primary owner is able to negotiate a reduced monthly debt payment with the creditor, the creditor may try to collect the remaining balance from the co-signers.
