Can You Get Off a Note That You Co-Signed?

Getting off a note that you co-signed is difficult, but there are some options. A note requiring a co-signer is a loan. Young adults finishing college sometimes purchase their first new car with an automobile loan co-signed by one of their parents. Other people qualify for home mortgages with the help of a co-signer. Lenders usually require co-signers only for people with poor credit or those who have yet to establish an acceptable credit history.

Responsibility

Co-signers assume complete responsibility for the loan if the primary borrower defaults on the loan agreement. Some loan agreements may allow the lender to declare a default after the first missed payment. However, the lender usually steps up collection efforts from the primary borrower before demanding payment in full on the loan from the co-signer.

Considerations

Some people who co-sign decide that they no longer want the responsibility. Some may fear that the primary borrower may indeed default on the loan, leaving the co-signer with a debt he cannot afford. But lenders have no reason to release a co-signer from a loan obligation just because the co-signer asks. That's not in the best interests of the lender, which approved the loan because of the guarantee by the co-signer. Without that guarantee, the lender has no one but the borrower to hold responsible for the note.

Option

The easiest way to get off a note that you co-signed is to convince the primary borrower to refinance the loan in his name only. That could be challenging, however. The primary borrower does not have to agree to refinance the loan, and there are no legal options for forcing the borrower to do so. Also, the primary borrower may lack the credit qualifications necessary for a new loan.

Bankruptcy

Filing for personal bankruptcy is the only other option for getting your name off a note that you co-signed. Bankruptcy automatically strips away your responsibility as a co-signer on all loans. However, bankruptcy also ruins your credit, with the bankruptcy filing remaining on your credit report for a minimum of 10 years. That makes filing for bankruptcy too big a price to pay for most people whose only financial issue is attempting to end their obligation as a co-signer.

Precautions

A co-signer who cannot escape responsibility for a loan should monitor the primary borrower's payments on the loan. For example, the lender may agree to notify you if the borrower misses a payment. Such notices will not end your responsibility for the loan but will alert you to possible financial problems for the primary borrower. With that information, you can contact the primary borrower to discuss the situation. Having to make a payment or two while the primary borrower works through a temporary hardship is preferable to having to pay the entire loan after a default.