Co-Signed Into Bankruptcy!
by Dave Ramsey

---

Dear Dave,

My wife co-signed on a loan for an ex-boyfriend five years ago when they were together, before we even met. Now a collection agency is after her. Our attorney has recommended we take Chapter 7 bankruptcy, but the debt is only $5,000. Is there a better way?

Jeff

Dear Jeff,

You bet there’s a better way! It’s just plain stupid to even consider trashing your financial life over $5,000. Bankruptcy stays on your record for years!

This is an old loan with very low expectations for collection. The collector probably bought it for next to nothing, and everything he gets will be profit. It’s not uncommon for debts this old to be settled for fifty cents on the dollar, and sometimes a whole lot less. Haggle with them, and I’ll bet you can talk them down to $2,500.

Get an agreement in writing before you send them a dime, and DO NOT give them access to your bank account. They’ll threaten to sue, or ruin your credit and that kind of stuff, but my guess is you can work this out. It may take a couple of weeks and some patience, but that’s nothing if it will save you $2,000 to $3,000.

You guys will have to pay some Stupid Tax on this one, but I hope it will teach you both a very valuable lesson. Never co-sign a loan!

– Dave

• For more financial advice plus special offers to our readers, please visit www.davesays.org or call 1-888-22-PEACE.

Comments on this article	ADD COMMENT
Loan co-signor Posted by Patti from Atlanta, GA Great advice! A law school professor once told me that the definition of a co-signor is an idiot with a ballpoint pen.