what happens if I refuse to pay a debt?
I co signed for my friend but he defaulted. What happens if me and him both refuse to pay
- 8 months agoFavorite Answer
The lender can go after either one of you. He will probably go after both. He will get a judgement against you and then garnish your wages and/or freeze your bank account. He will report you to the credit rating agencies and your credit rating is going to be destroyed.
Now you know why signing for other people is a really bad idea.
- 8 months ago
Sent to collection agency for further legal notices and find opportunity to ruin your credit score which prevents the future of applying for house and car loans.
- curtisports2Lv 78 months ago
I wouldn't worry about what happens to the ex-friend.
The creditor can sue you and get a money judgment against you. If you still don't pay, your credit will go to 'Poor' from wherever it is now, and you'll STILL owe the money.
- oklatomLv 78 months ago
By cosigning YOU agreed to pay if he did not. If he does not it becomes your debt. You pay and go after your friend. If you don't pay you ruin your credit and are sent to collections.
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- 8 months ago
In the US, the typical process is:
30-90 days after you don't pay, the creditor submits negative information to the credit reporting agenciesThe creditor enlists a collection agency to collect the debtAfter 6 months or so of non-payment, the creditor will "charge-off" the account. A charge-off is a tax accounting term, which adjusts the taxes owed by the creditor. It doesn't mean anything to the borrower except that their credit score will be hit hard.At this point, the account status on your credit report should go from "delinquent" to "closed by credit grantor/charge off" and a new account for the amount of the debt, with the collection agency as the creditor, appears.Depending on the statute of limitations in your state, the creditor or collection agency can sue you for the debt. (See Why Chat's Credit Confusion for state statutes.)After the SOL expires, the debt collector can still attempt to collect the debt but they have no legal recourse to sue the debtor, unless they restart the SOL by making a payment.After 7 years from the date of first delinquency (the first missed payment), the debt can no longer be reported on your credit report.The reality is that modern life will be much more difficult for people with bad credit - they'll have to do things like pay larger deposits on apartment rentals, have higher loan payments on their cars, need to use cash for just about everything and generally have a rough time when competing for resources (like housing) with people with good credit.
- JudyLv 78 months ago
Just like a debt that was yours to start with, you're sent to collections, then maybe sued, and it goes on your credit report that you defaulted. Same things that happen to him. When you cosign, you become equally responsible for the debt. What did you think it meant?
- LollyLv 78 months ago
You get a judgement against you and a hit on your credit. You would need to pay this if you ever want to buy a house or maybe even a car on credit.
- 8 months ago
Ruins your credit. I would be very pissed at the friend and this why you never co sign for anyone.
He should at least try to find someone else to take whatever it is over. Or if it’s a car or something, maybe you will get lucky and he get in a safe wreck and the insurance will have to take over.
- EvaLv 78 months ago
They can take you to court and get a judgement against either or both of you. They can then use that judgement to garnish your wages. That's why you never cosign. It will also trash your credit.
- Anonymous8 months ago
You ruin your credit
Your pay can be garnished
- Pearl LLv 78 months ago
they might take you to court for that