When an individual signs for a line of credit, they provide their personal financial assurance on the repayment of the credit used. This means an extensive credit check is run on that individual before approval of the credit line. With multiple signatories to a line of credit, each person involved must undergo the same extensive checks before approval. Often the amount of the line of credit depends on the combined abilities of the participants to repay. Removing a signer for such a line can be difficult unless the remaining loan participants agree to a refinancing based on their financial strength alone, without removing the individual. This, in effect, creates an entirely new line of credit.
Instructions
- 1
Meet with the provider of the line of credit along with all other signatories on the line of credit.
2Obtain line of credit application forms from the provider for each of the remaining signatories from the provider.
3Instruct all of the remaining signatories to fill out the applications, including all of their personal financial information. Have everyone sign the forms then give them to the credit provider.
4Wait for the provider of the line of credit to verify the provided information and to determine whether the remaining signatories have the financial means to support the new line of credit. If approved, the new line will open in the name of the remaining signatories, with the signer desiring removal not included or having access to the funds. This new line will pay off and close the old line and transfer the debt.
5Meet with provider and the remaining signatories again to sign the financial agreements for the new line of credit, and authorize that the new funds close out the old line of credit.
6Seek a new lender if the actual provider does not approve the removal. Under a new creditor, the terms of the credit line can change, including a higher interest rate applied to the amount of money used from the credit line to a lower line of credit offered to the signatories.
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