How to Change the Ownership of Debt

It is not uncommon for an individual to sign for a debt on behalf of another person or as a co-signer. For instance, a parent may purchase and finance a car for a teenager. Nevertheless, the time may come when that individual wants to remove himself from the debt account completely. It is very difficult, but possible in some rare cases, to change the ownership of debt.

Instructions

1

Contact the lender to ask for specific details on how to change ownership of the debt account. This may be referred to as a loan assumption, depending on the lender. If the lender allows this move, you most likely need to provide the full credit profile of the person who will take over the debt account. That includes proof of income as well as the new applicant's contact information and Social Security number so that the lender can perform a credit check. For some types of loans the lender may also require asset statements and a down payment.

2

Ask the new applicant to provide the information required to change ownership directly to the lender. This person should ideally have blemish-free credit and a credit score that meets or exceeds your own for the lender to seriously consider this change.

3

Fill out the required application to change ownership. Both you and the applicant may need to fill out sections of the application, including the current account number, existing loan balance, and identifying information about the current debt holder.

4

Allow the lender time to evaluate the change of account ownership application and documentation. In some cases the lender will simply refinance the loan and transfer the funds owing into the new debt holder's name if approved.