By Ron Dorner
For Christians, it is important to follow biblical principles. Yet, during my years of speaking and counseling believers there is one principle I see frequently violated. The Bible calls it surety; we call it “co-signing.”
The dictionary defines it as pledging to make a lender secure against damage or loss. Proverbs warns against surety at least three times. One specific text is:
My son, if thou art become surety for thy neighbor, if thou hast stricken thy hands for a stranger; thou art snared with the words of thy mouth, thou art taken with the words of thy mouth. Do this now, my son, and deliver thyself, seeing thou art come into the hand of thy neighbor: Go, humble thyself, and importune thy neighbor; give not sleep to thine eyes, nor slumber to thine eyelids; deliver thyself as a roe from the hand of the hunter, and as a bird from the hand of the fowler. (Proverbs 6:1-5)
There are many warnings about co-signing. Don’t confuse this with signing for a loan for a business, such as a partnership or corporation. The warnings seem to be directed toward surety between individuals. This biblical principle is often violated between parents and children.
Qualifying for a loan or credit in the United States has been going through a transition from responsible to irrational qualifying over the past thirty years. The younger generation has been raised as the “haves and needs” generation.
Proverbs 17:18 says, “A man void of understanding striketh hands, and becometh surety in the presence of his friend.”
Notice the term “void of understanding.” This means that you have not given careful thought to the result of co-signing. I urge anyone who is asked to co-sign to give much prayer to the situation.
Co-signing often places children in an unbearable payment position before their financial situation matures. Remember, if today’s creditors will not lend without co-signing, that tells you there is no way the person should go in debt for that object!
A better way to help your children is to give them money if you are able. If you can’t afford this option you need to ask yourself, “Can I afford to make the full loan payment on what I am co-signing for?” It is possible that you may have to make those payments or have your credit record impacted.
Remember that the definition of credit is being able to have something before we can afford to pay for it. Anytime we buy on credit we are making assumptions about our future income.
Proverbs 11:15 says, “He who is guarantor for a stranger will surely suffer for it, But he who hates being a guarantor is secure.”
This verse warns against being surety for a stranger, but notice it also says you are secure, or can sleep at night, if you hate providing surety. This applies to all co-signing, even for your children.
Take the counsel of God’s Word and sleep well at night.
Ron Dorner has worked in Grace Brethren financial and estate planning for more than 17 years. For more information, or to schedule a Financial Planning Seminar in your church, e-mail firstname.lastname@example.org.