Q&A: Co-signing

Dear Liz: We have raised our granddaughter since birth. She is the apple of our eyes. Then she fell in love. The boyfriend had no job, no car. My husband co-signed a loan for this boy! He didn't even know the boy's last name. I was devastated, as we are on Social Security so our income is limited. Our granddaughter couldn't afford the payments and the boy was useless. They got so far behind that we ended up having to mortgage our home to pay off the truck. We hoped to sell it but of course the kids have broken up and the boy disappeared. When I asked the Department of Motor Vehicles what I could do to get him off the title, they said I couldn't do anything.

Answer: Your husband is showing signs of cognitive impairment. Co-signing a loan can be (and often is) a lapse in judgment; co-signing for a virtual stranger indicates a more serious problem.

A study for the Center for Retirement Research found that people's financial decision-making abilities peak in their 50s. By our 70s, our problem-solving abilities typically have declined enough to make us more vulnerable to bad decisions and fraud.

That's why it's important to simplify our financial lives in retirement and to consider safeguards that can keep us from being victimized.

Freezing your credit reports at the three major credit bureaus is one good option. That can keep criminals from opening accounts in your names. You would have to thaw your reports to apply for a loan or credit card, and adding that extra "speed bump" to the process could give you time to rethink a bad decision.

If you had children you could trust, you might have your financial institutions send them duplicate statements and discuss any large purchases or investments with them. If you don't have someone you trust, a licensed fiduciary could serve a similar function. California has a Professional Fiduciaries Bureau within its Department of Consumer Affairs where you can learn more.

At this point, you should check the vehicle title to see if the names are listed with an "and" between them or an "or." If it's an "or," your husband should be able to transfer title to the new owner. Otherwise, you may need to get an attorney to help you get a legal order to remove the boy's name from the title. Check with your local bar association to see if there are any pro bono or legal aid services that can help you.

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