My spouse and I co-signed a loan for our son. Without our knowledge, our son stopped making payments. The bank turned our names over to a collection agency and we are concerned about our credit rating. Shouldn’t we have had some notice that the loan was i

When you co-sign a loan, you and the borrower are equally responsible for the loan payments. Being a co-signer is a serious responsibility. You may receive no benefits from the loan, but you could still be required to pay for it. West Virginia law requires the lender to inform you of this great responsibility in writing and you must sign it before the loan is granted.  

You should never sign a document without reading and understanding it first. If you do not understand something in a document you are given to sign, ask questions and get answers from someone looking out for your best interests until you understand. The law will almost always assume that when you signed the document, you understood the contents. 

After a loan payment is missed, the lender must give you notice and a time to cure. To cure a loan payment means that you bring the missed payment up to date. The notice requirement means that the lender must give you time to make the payment before he or she can report adversely about your credit record or take further collection action. The lender must give written notice of the default (failure to pay) when the payment is at least five days late. You then have 10 days from the time of the notice to pay the amount plus any late charges or service fees. 

If you cure in time, everything is back to normal as if the payment were never missed. However, you can only miss payments and then cure without a penalty two times. If the borrower has defaulted three times, even if he cures on the first two, the lender has the right to proceed against him. 

In addition, the notice need only be sent to your last known address. If you move, and the lender does not know your new address, you may never get the notice and may have no idea the loan is in default. Therefore, it is wise to inform the lender of any change in address, even if you are just the co-signer. 

For more information, see: 15 U.S.C. §§ 1601-1615 (2015); W. Va. Code §§ 46A-2-104 to -106 (2015).