Can a co-signer be held responsible to pay for a defaulted loan if this loan was never agreed to? Posted on June 21, 2011

I don't see a "Banking/Finance" category. Bankruptcy law often deals with banks, so I'm hoping this is close enough... Financial law question, regarding banks, loans, and co-signers: A bank loan is negotiated for an adult student that requires a co-signer due to a poor credit rating. After paying on this loan for some time, the bank extends one of those "pre-approved for cash" loan offers to the student- one of those loans where you simply deposit a pre-filled check to accept the terms. The student then defaults on this loan. Can the bank rightfully declare the co-signer responsible for this money and go after them for repayment, despite the co-signer never agreeing to the revised terms, or being involved in any way in accepting or agreeing to responsibility for what is essentially a new loan? Can the original co-signer be perpetually responsible for all financial decisions made by the account-holder? Contract law would usually say no, but banks seem to play by a different set of rules. (That they wrote...)

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