When someone co-signs on a loan what is he doing essentially? What does this mean if the time comes to pay the loan and the borrower doesn’t have the money to pay back (or perhaps refuses to pay back for whatever reason)? If there are 2 people co-signing on the loan does one have to give more than the other? Can one co-signer say “I don’t have — go to the other co-signer”? What if they both say that? I know these are a lot of questions in this inyan. Perhaps some sort of clalim can be given to understand better.
Answer:
Cosigning means guaranteeing a debt, or becoming an arev.
Today, many creditors demand the cosigning of an “arev kablan.” If this is done properly, it means that the creditor has the right to demand payment from the cosigner even before he turns to the borrower.
The guarantor, however, has the right to claim back the money from the borrower.
A regular cosigner cannot be approached before the borrower; only after the borrower defaults, and is found unable to pay the debt, can the creditor approach the cosigners for payment.
If two people cosign a loan, the creditor has the right to claim the entire sum from either one of them (Shulchan Aruch 77:3). However, the cosigner that pays the debt has the right to claim half from the other cosigner (Sema). Because there are those who dispute this (former) ruling, many creditors are careful to write that each cosigner is independently responsible for the debt.
If the cosigners don’t have money, they have the same status as the borrower himself; the creditor is able to take action to collect his debt from their property etc, according to the principles of debt collection.
Before cosigning a debt, one must take into account the possibility of actually paying the debt, and ensure that one has the means to do so. If one cosigns without the means of paying the debt, one transgresses the injunction “a wicked borrower who does not pay.” Regrettably, this issue is often not taken seriously enough.
