At a time like this, when jobs and finances are going to hell, the last thing you want is to create a bigger fire to slowly roast yourself alive. These are some things you should definitely think about – and it might just save your skin.
- Cosign for relatives/friends
When you're asked to cosign for someone, the creditor has determined that it does not trust that person to repay the loan. The creditor insists on you putting up your money, your property, your future income and your good name to guarantee that the loan will be repaid.
If your relative does not pay, the creditor will come after you. The creditor does not have to try to collect from the relative. If you do not pay it, and it will looks just as bad on your credit as if it were a loan to you.
- Take out a second mortgage to pay off credit card debt.
If you borrow on you home, you will increase the monthly cost to stay in your home which could result in its loss if your financial circumstances worsen.
In addition, you will be converting short term debt--debt which should be paid off in a matter of months--into long term debt which will take years, or even decades to pay off. Even worse, you may be tempted to again run up the charge cards which you have been paid off so that you have lost your equity in your home for nothing.