Mary Hunt: As co-signer, you too are responsible for debt

DEAR MARY: A few years ago, I co-signed a home loan for my sister. She promised me at the time that she would refinance within the year and take me off the loan. Well, that never happened, and my sister is in serious financial trouble. The bank is threatening to foreclose on her house. Even worse, my husband and I were recently turned down for our own loan because of my now-bad credit score.

My sister is refusing to refinance or sell the house so my name can come off the loan. My husband is furious, and it's really causing a strain on our marriage. What can I do? — PATTY, COLORADO

DEAR PATTY: You've got the financial equivalent of a medical alert. When you co-signed, you guaranteed the loan — and the lender is not going to let you off the hook. You are legally obligated for the loan as if it were yours alone. Your sister has shown her cards, so it's time for you to try to save the day. Call the lender immediately to find out exactly what it will take to bring the loan current. Then sit down with your sister and let her know in no uncertain terms you are selling the house and you expect her full cooperation. At the very least, this will be a seven-year black eye on your credit report; at the most it could force you into bankruptcy.

Co-signing is such a serious matter, federal law requires lenders to give the co-signer written notice that fully explains the legal obligation. If you did not get that full disclosure when you co-signed, you may have legal recourse. In that case, I suggest you speak with an attorney right away.

Help! Co-workeralways bums money

DEAR MARY: One of my co-workers is constantly asking to borrow money during the week. It's never a large amount, just a few dollars here and there to grab a soda or cover her lunch order. The problem is that she never pays me back. I feel petty bringing it up, but all this money adds up after a while. Is there a way to approach her without making both of us uncomfortable? — DEBBY, MICHIGAN DEAR DEBBY: Money issues are always sticky, especially between co-workers. The first time you lent her money, you wrote the rules. You taught her that all she has to do is ask and you will give her money without a need to repay. She caught on quickly and has continued to play by your rules.

Now you have to change the rules. So the next time she asks to borrow money, say, "Sally, I'm sorry but I don't want to risk our friendship over money." Then turn away and go about your business. That will probably put an end to her requests. If she's a slow learner and persists, follow with, "No, it would put our friendship at risk, and I'm not willing to do that."

If you decide to recoup what she has borrowed, go to her with a total and ask her to come up with an acceptable repayment plan. Putting it in writing will teach her that you are serious and that you will hold her to repayment.

If not, write it off as an important lesson learned so that it does not affect your working relationship.

Do you have a question for Mary? Email her at mary@everydaycheapskate.com or write to Everyday Cheapskate, P.O. Box 2099, Cypress, CA 90630.