Personal Money · Friday, 28 August 2026

01 Briefing what happened

Co-signing: why the backup payer was never a backup

Personal Money 1 min 48 sources

A co-signer owes the whole debt from the moment they sign, and has no access to the account. In some states a lender may pursue them before the borrower.

100%

of the bill a co-signer owes

the same full amount as the borrower, with no access to the account [2]

90 days

past due before lenders weigh suing

by then the missed payments already sit on the co-signer's file [1]

7 years

most negative marks stay on a credit report

so a borrower's missed payment follows the co-signer that long [7]

$200,000

lifetime federal loan cap for medical, dental and law students

they could previously borrow the full cost of attendance [11]

The lead story — what happened

A guarantor's obligation starts only when the borrower defaults. A co-signer's starts at the same moment as the borrower's. [3]
So a co-signer is not a backup. They are on the hook for 100% of the bill, with no access to the account. [2]
In some states a lender can try to collect from the co-signer before going after the borrower, according to the Federal Trade Commission. [1]
The co-signer shares the legal responsibility but never touches the money. On a car loan they get no ownership either. [5][6]
The loan lands on the co-signer's credit report. A payment the borrower misses pulls the co-signer's score down. [1]
It also counts in the co-signer's debt-to-income ratio, so their own later application can be turned down. [1]
Lenders generally weigh legal action once a debt is at least 90 days past due. A judgment can lead to wage garnishment. [1][4]
Leaving is usually not the co-signer's decision. Some lenders only let the original borrower apply for a release. [4][44]
Where a release exists it normally needs a run of on-time payments and a fresh credit check on the borrower. [4]
Some lenders never allow a co-signer to be taken off at all, so the promise can outlast the reason for it. [44]
Most major card issuers have phased out co-signers on credit cards, leaving loans as where the practice lives. [8]
There is a business version. An unlimited personal guarantee makes an owner personally liable for the whole business loan. [9][43]
A rental guarantor is different again: not on the tenancy, but liable if the renter stops paying or leaves early. [10]
The co-signer is legally responsible for repaying the loan, and can face legal consequences if they in turn fail to pay. [42]

What is pushing on this

The lender's cheapest route High→

some states let a lender pursue the co-signer first, per the Federal Trade Commission [1]

The co-signer's control Easing↓

some lenders only let the original borrower apply for a release [4]

Pressure to find a co-signer Building↑

most graduate borrowers are now capped at $20,500 a year in federal loans [11]

Credit exposure High→

the debt sits on the co-signer's report and counts against their own borrowing [1]

Who is involved

The co-signer — owes the whole debt, holds none of the decisions that grow it The borrower — makes every payment decision, and is often the only one allowed to ask for a release The lender — gains a second person to collect from, and chooses which one to approach The Federal Trade Commission — warns that some states let lenders pursue the co-signer before the borrower The credit reporting companies — record the same missed payment on two people's files

How it unfolded

Signing day The loan appears on both credit reports, and the co-signer's responsibility begins at the same moment as the borrower's. [3][1]
First miss The missed payment lands on the co-signer's score. They may have no access to the account information at all. [1][2]
Day 90 Lenders generally start weighing legal action once a debt is at least 90 days past due. [1]
After a judgment The co-signer can owe all the costs, including the lender's legal fees, and wages can be garnished. [1][4]
Seven years on Most negative information can still be reported on the co-signer's credit file. [7]

Where this points

Watch the new federal borrowing caps: the less of a degree that federal loans cover, the more families are asked to sign for one another. [11]

The rest of the day

21 more stories on this beat.

Each with its own sources. None of these is a link to the story above.

02
Nursing homes press caregivers to sign

The CFPB says a nursing home should not make a caregiver personally responsible for a resident's bill as a condition of admission. [12]

Why it matters — Some hire debt collectors anyway, report it as the caregiver's own debt, and sue. The same promise, asked for at the worst moment. [12]
03
Debt collectors chase the wrong survivor

A survivor is generally not responsible for someone else's debt, the CFPB says. It should be paid from the estate, and if there is no estate it usually goes unpaid. [14]

Why it matters — One complaint describes an older man billed by a collection agency for his dead son's cable account. [13]
04
A joint tax return owes the whole bill

On a joint return both people are responsible for the tax, interest and penalty, however the income was earned, the IRS says. [15]

Why it matters — Relief exists but has to be asked for, and separation of liability only applies once a couple is divorced or living apart. [16]
05
A spouse's bad score is not catching

One spouse's poor credit score does not touch the other's, the CFPB says, because a score is built on one person's history. [45]

Why it matters — On a joint application it counts against both, which is the moment two files become one decision. [45]
06
Rent guarantee insurance pays the landlord

It reimburses a landlord when a tenant stops paying, usually for up to 12 months. The tenant still owes the rent and the legal fees. [17]

Why it matters — A guarantee adds a payer. It does not shrink the debt, and it does not move who owes it.
07
A screening file can cost a tenant the flat

A landlord who rejects an applicant because of a tenant screening report must send an adverse action notice, under the Fair Credit Reporting Act. [39]

Why it matters — The screening company then has 30 days to investigate a dispute, and some states set shorter deadlines. [39]
08
A 36% ceiling for military families

The Military Lending Act caps covered credit at 36% a year for active-duty servicemembers and their spouses, and bars forcing repayment through a military allotment. [18]

Why it matters — It is a rule about what a lender may ask someone to sign, which is the thing co-signing has almost none of.
09
Private loans are where co-signing lives

Private student lenders commonly want a co-signer with strong credit, and some offer a release only after set conditions are met. [40][41]

Why it matters — Not all private lenders allow a co-signer to be taken off, so a parent can stay liable long after the student is earning. [44]
10
Seven million told to change plan

The SAVE repayment plan ended on 1 July 2026 after a March 2026 court ruling, giving more than 7 million US borrowers 90 days to pick another. [19]

Why it matters — A proposed settlement had already signalled the end, restarting payments for borrowers who had been in limbo for months. [36]
11
Congress rewrote loans already being repaid

A Utah pharmacist who borrowed $166,000 and enrolled in Pay As You Earn in 2013 now faces a plan with longer terms and bigger payments. [20]

Why it matters — The One Big Beautiful Bill Act swept in existing borrowers, not only new ones. [38]
12
Graduate borrowing capped, Grad PLUS gone

Medical, dental and law students can now borrow $50,000 a year and $200,000 in total. Other graduate borrowers are held to $20,500 and $100,000. [11]

Why it matters — Grad PLUS loans are no longer available, and parents are capped at $20,000 a year and $65,000 per student. [37][11]
13
Twelve million UK drivers due payouts

The FCA says 12 million people are entitled to car finance compensation averaging £829 each, down from an earlier estimate of 14 million. [21]

Why it matters — Shares in Close Brothers rose 2.8% and Lloyds 1.1% when the eligible number came in lower than expected. [21]
14
The interest on the payout is the fight

The FCA proposed paying 2.09% interest on car finance redress. Claims firms say that costs victims about £4bn, and one claimant is believed to have received about 7%. [22]

Why it matters — MPs told the regulator its consultation kept warning about lender profit margins, and accused it of siding with lenders. [23]
15
Car finance payouts could slip three years

Four parties are challenging the scheme: the finance arms of Volkswagen, Mercedes-Benz and Credit Agricole, plus the campaign group Consumer Voice. [24]

Why it matters — The FCA told MPs the challenges could add £6bn of costs to lenders and leave drivers waiting three more years. [24]
16
UK brings buy now pay later into rules

New FCA rules for buy now, pay later credit took effect in July 2026, ending what the government called the sector's wild west. [25]

Why it matters — The market grew from £60m in 2017 to more than £13bn in 2024, on the FCA's own figures. [25]
17
Pay-later loans move to the essentials

The apps Flex and Zip lend for broadband, electricity, health insurance and water bills. Affirm extends rent for some tenants. [26]

Why it matters — Americans spent $160bn through pay-later loans last year, and the feature now comes built into many credit cards. [26][47]
18
Overdraft fees charged without consent

The CFPB said some banks could show no proof that customers had opted in, and ordered Regions Bank to pay $191m over surprise overdraft fees. [27] A single fee can run to $30 or more, though some banks now charge none. [46]

Why it matters — Bank and credit union customers paid an estimated $15bn in overdraft and insufficient-funds fees in 2019. [28]
19
Pension pots enter UK inheritance tax

From April 2027 unused private pensions count as part of an estate. Inheritance tax is 40% above £325,000, or £500,000 when a home passes to children. [29]

Why it matters — Nearly one in five UK savers aged 65 and over say they have already started giving money away in response. [29]
20
US gift allowance holds at $19,000

The amount one person can give another without triggering federal gift tax reporting stays at $19,000 per recipient for 2026, up $1,000 from 2024. [48]

Why it matters — A married couple can effectively double it to $38,000 per recipient, for as many recipients as they like. [48]
21
Family firms face a 20% succession bill

From April, UK business and farm assets above £1m are effectively taxed at 20% when passed on. A Wrexham sports goods founder says his bill could run to tens of millions. [30]

Why it matters — The Treasury says the reliefs being trimmed mostly benefit a small number of wealthy estates. [30]
22
No-fault evictions end in England

From 1 May a landlord in England must give a legal reason to evict, and fixed-term tenancies are replaced by rolling ones. More than 11,000 households were repossessed after a Section 21 notice in the year to June 2025. [31]

Why it matters — Reports of no-fault evictions to the renters' union Acorn rose from one in five in October to nearly one in three by January. [35]

02 Lesson why it matters

There was never a queue

A co-signer is not standing behind the borrower but alongside them, and a lender collects wherever collecting is cheapest.

The twist

A guarantee does not stand behind the borrower. It stands beside them, and the lender walks toward whoever is easier to reach.

How it works

A lender wants a second name it can collect from
The second person signs and owes the whole debt
But every decision that grows the debt stays with the first person
And the account information stays with the lender
So when the money stops, the lender goes wherever collecting is cheapest

Where you've seen this

Company owners

a personal guarantee makes the owner liable for the firm's loan, undoing the thing a limited company was for

Bail sureties

the money is lost on a decision only the defendant can make, and the surety cannot make it for them

Joint tax returns

both signatures owe the whole bill, whichever of the two actually earned the income

Rent guarantees

a parent signs for a flat they will never live in, on a tenancy their name is not even on

The catch

The promise is often the only reason the loan exists. Refuse it and the person who needed the money frequently just does not get it.

And the whole of it

Every seat here is behaving sensibly. The lender wants a second name, the borrower needs one, and the person signing wants to help someone they love. What none of the three is looking at is the shape the arrangement makes: the one who can see least of it carries the most.

03 Lab your turn

The Collection Desk

Run a lender's collection desk for twelve months and feel why the co-signer, who borrowed none of it, is the name that gets called.

04 Truth what's really going on

What is really going on

A co-signature is asked for as a favour that costs nothing unless things go wrong; in law it is simply a second person the lender may collect from first.

Why it works on us — The request always arrives as a question about trust in a person, while the paperwork is a question about money.

Who gains

Lenders who ask for a co-signer — They get a second person to collect from and, in some states, may approach that person before the borrower. [1]
Private student lenders — Federal caps of $20,500 a year for most graduate borrowers push families toward private loans that usually want a co-signer. [11][40]
Landlords with rent guarantee insurance — The policy pays them for up to 12 months and the tenant still owes every pound of the missed rent. [17]
Nursing homes that get a caregiver's signature — An admission contract turns a resident's unpaid bill into a debt they can report to credit agencies and sue over. [12]
Close Brothers and Lloyds shareholders — Their shares rose 2.8% and 1.1% when the number of eligible car finance claimants came in lower than expected. [21]

Who pays

Co-signers refused credit years later — The debt counts in their debt-to-income ratio even when every payment on it has been made on time. [1]
Parents who cannot get released — Some lenders only let the original borrower apply for a release, and some never allow removal at all. [4][44]
Borrowers moved off SAVE — More than 7 million had 90 days to choose a new plan after a court ruled the old one unconstitutional. [19]
A pharmacist who enrolled in PAYE in 2013 — He borrowed $166,000 and now faces longer terms and larger payments than the plan he chose. [20]
Households borrowing for utility bills — Flex and Zip lend for electricity, broadband and water, so interest is now charged on the cost of staying warm. [26]

What nobody knows yet

Open questions from across today’s stories — ours included.

01

How much a driver actually gets from the car finance scheme.

The FCA has been reported as averaging £829 per person and about £700 per agreement, and a person can hold more than one agreement. [33][32]
02

What the whole car finance bill comes to.

The BBC reported lenders could pay £8.2bn; the Guardian reported an £11bn estimate including administrative costs. The figure moved as the scheme was rewritten. [32][22]
03

How many co-signed loans end with the co-signer paying.

No such figure appears anywhere in this pool. Lenders publish arrears, not which of two names they collected from. [1]
04

Whether a co-signer or a guarantor is pursued first in any given state.

Investopedia says a co-signer's liability starts alongside the borrower's while a guarantor's begins at default; NerdWallet says only that some states let lenders go to the co-signer first. [3][1]
05

How many US borrowers will pay more than the terms they signed up for.

The changes swept in existing borrowers as well as new ones, and no total has been published. [20][38]
06

Whether the FCA's 2.09% interest rate on car finance redress survives.

Four parties are challenging the scheme, and the regulator told MPs the challenges could delay payouts by three years. [24][22]
07

How many caregivers have paid a nursing home bill they never owed.

The CFPB describes the practice and names its own circular, but publishes no count of how often the demand works. [12]
08

How many car finance agreements are eligible at all.

One FCA figure put reviewable agreements at up to 30 million between 2007 and 2020, while the redress scheme names 12 million people. [34][21]

05 Hope carry this

A co-signature exists because somebody chose to make another person's life possible. The contract is lopsided; the instinct behind signing it is not.