Co-Signing = Stupid Tax

Ken in Grand Rapids co-signed for his sister to move into an apartment. She moved out of the apartment last year but ran up a lot of bills, and now Ken is getting the bills and collection notices.

QUESTION: Ken in Grand Rapids co-signed for his sister to move into an apartment. She moved out of the apartment last year but ran up a lot of bills, and now Ken is getting the bills and collection notices. Dave suggests paying them and chalking it up to stupid tax.

ANSWER: So the net result of co-signing is that you lose contact with your own sister that you were trying to help. How sad.

Here’s what I would do: I would call the sister and leave her a message that just says, “I love you more than $911. I’m going to pay it. Don’t worry about it. Forget it.” It’s your fault, too. You were stupid for co-signing. It’s stupid tax. Don’t do that kind of stuff again because it will cost you relationships.

Then you have to call the people at the apartment and try to get some kind of a settlement. Whatever you do, get it in writing before you give them any money. I would try to negotiate it. I would say, “I don’t have a lot of money here. My sister sprung this thing on me. I had no idea.” Whine a little bit and then offer them an odd amount. Just make up an odd figure so that it sounds like you really thought it out. Offer them that, and when you get it in writing that they will accept that as settlement in full, then and only then do you send them money in the form of a cashier’s check—no electronic access to your checking account. They will clean you out.

It’s not worth it. It’s $900. Settle it and tell her she’s forgiven and get it out of your life. You’re going to chalk it up to something stupid you did, and never co-sign again.

When you do something stupid with money and it costs you money, we call that stupid tax. Sometimes, you just chalk it up to the tuition of the school of life. You never co-sign—ever—for anything under any circumstances. You have to love someone enough to say no.