Is it wrong to co-sign on a loan?

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download (5)Solomon, the wisest man, advised the believer not to rush and co-sign (guarantee) on a loan: “He who is surety for a stranger will suffer, but one who hates being surety is secure” (Proverbs 11:15). Long ago, these words were written to warn men of what is still common ground for failure in life and in business transactions. No one should co-sign with another on any amount which possibly could become their responsibility to pay. People could help their well known friends but to offer help for someone they don’t know well is not safe.

Christians should not help all that ask them regardless of their situation but should make a careful investigation of their situation and evaluate the reason for their failure. In helping others, a Christian must take the principles of good stewards into account. For example, a Christian ought to help those that help themselves. But those who live above their means and what they make, who by the mismanagement of their own affairs, or by accumulating debts, waste what they have and bring themselves into debt, a Christian must not do contracts with.  These mismanagers should learn to handle their resources wisely and the basic economics of prudence and financial planning. A Christian can only advise them on how to handle their money but should not co-sign for them.

“Do not be one of those who shakes hands in a pledge, one of those who is surety for debts; if you have nothing with which to pay, why should he take away your bed from under you?” (Proverbs 22:26,27). Christians must not co-sign for the ungodly who do shady business transactions. This may cause a great damage to those that give them credit. And Christians must not co-sign for others when they don’t have the resources to pay.

If a someone by some reason is disabled to pay his debts, we should have pity but caution must be given lest when the person fails to provide for himself, consequences will take their course and the co-signer will be asked to provide the money that he didn’t have in the first place. By hasty transactions the Christian must not ruin his own estate and family resources. The danger can be not just ours but our family’s as well. And finally, because only God knows the future and the hearts of men, this matter should be taken to the Lord in prayer for guidance so that everything can be done to avoid harm.

Check out our Bible Answers page for more information on a variety of topics.

In His service,
BibleAsk Team

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