Alexandria Legal Blog

If you have a child or other family member who is unable to get the loan or credit card they want on their own, they may ask you to be a cosigner or joint account holder. Before agreeing to do this, it's essential to understand what this could mean for you -- particularly if your loved one is unable to make their payments.

Cosigners and joint account holders are both responsible for paying whatever debt is owed if the primary account holder is unable or unwilling to. However, they typically have no access to the account and may not even be allowed to see the status of it. That can be dangerous, since a loan, line of credit or credit card can be seriously overdue before they're aware that there's a problem.

In the first quarter of this year, Fannie Mae and Freddie Mac reported that they prevented nearly 39,000 foreclosures. According to the Federal Housing Finance Agency (FHFA), these two government-sponsored enterprises (GSEs) have stopped over 4 million foreclosures since the height of the recession in Sept. 2008. In the majority of cases (over 3,600,000), homeowners were able to remain in their homes.

Over half of those foreclosure prevention actions involved permanently modifying the terms of the homeowners' mortgage loans. In Q1 2019, over one-third (38%) of the modifications reduced monthly mortgage payments by over 20%.

When credit card debt piles up, it's easy to believe that your entire financial situation is heading down the drain. While you're in a tight spot, it doesn't mean you should give up.

There are many ways to quickly pay down credit card debt, including the following:

• Focus on small chunks: Rather than look at your credit card debt as a whole, focus on eliminating small chunks at a time. For example, if you have $20,000 in debt, focus on paying it off $2,000 at a time.
• Start with the credit card with the highest interest rate: Eliminating this first will save you the most money, as you're no longer subject to large finance charges for carrying a balance.
• Opt for a balance transfer credit card: Not only does this allow you to consolidate your credit card debt, but you can also take advantage of a zero percent introductory rate for a period of 12 to 24 months.
• Negotiate with your credit card company: It never hurts to ask if there is anything they can do to help your situation. For example, you may be able to negotiate a lower rate or the removal of late fees.

If you come to the conclusion that bankruptcy is the best way to improve your finances for a better future, it's time to push forward with the appropriate steps.

Before doing so, it's important to discuss your decision with your family. This is particularly true of your spouse, as they need to be included from start to finish.