Biblical Finance 101: Stewardship Do's and Don'ts 2

This is a continuation of The Do's and Don'ts of Stewardship. Many Christians are coerced into cosigning. Do not cosign for anyone, unless you are financially willing and able to pay the note. Proverbs 22:26 says, "Do not be among those who give pledges, among those who become sureties for debts." A surety is one who is the guarantor for the debts of another. There are many passages in Proverbs that warn about the pitfalls of becoming a surety. I believe these passages refer to all relationships, except intra-family. In the business world, certain business people can unknowingly become a surety for business debts because of their positions. Whether personal or business, be aware of "contractual" and "assumptive/presumptive" responsibilities.

Intra-family relationships, for this discussion, are between parents and children. Another "assumed" responsibility of parenting is to help get the kids financially established. The old cliché, "It takes credit to get credit," is just as true today as when I first became an adult. In order to help children get established, many parents do cosign, all the while knowing the potential consequences. Sometimes, the debt does revert back to the parent. Initially, there is disappointment along with a few other unmentionable emotions, but the relationship survives.

As already mentioned, all other cosigning arrangements are taboo. If the borrower defaults, then creditors will always pursue the one with the best ability to pay - the cosigner. Many friendships, personal and business, have been destroyed because of cosigning arrangements. Here's a thought for you to ponder if someone asks you to cosign a note: If the professional money lenders are unwilling to lend the money, maybe that's a good sign for me not to. Help out if you may, but not with your signature.

Gary Ellis, MBA, CFP
Association Stewardship Director