For many parents, helping an adult child get on their feet means lending support where it matters most, like housing, education, or a car loan. Cosigning a loan often feels like a natural extension of that support. You trust your child, believe in their future, and want to give them every advantage.
But few parents fully understand what they’re signing up for. Cosigning doesn’t just mean you’re “vouching” for your child. It means you’re legally responsible for the debt. And if your adult child ends up being sued over unpaid debts or defaults on a loan, your name, your credit, and even your assets could be dragged into the legal fallout.
The road to financial ruin is often paved with good intentions. Here’s what really happens when your adult child is sued and you cosigned.
1. Your Liability Isn’t Just Moral. It’s Legal
Once you cosign, you’re not just backing your child’s loan with emotional support. You’re agreeing to be fully responsible for it. If your adult child is sued for defaulting on a loan or failing to make payments, creditors don’t have to chase them exclusively. They can and often do go after the cosigner.
That includes garnishing wages, levying bank accounts, and placing liens on property if the cosigner doesn’t voluntarily repay. You essentially become the “backup borrower,” but legally, you’re treated as a co-borrower. And when lenders go to court, they rarely care who used the money. They care who signed the contract.
2. Your Credit Score Could Take the Hit
Many parents are shocked to discover that their credit score can take a nosedive due to their child’s financial missteps. Late payments, defaults, or lawsuits tied to a cosigned loan appear on your credit report just like they would if it were your loan alone.
Even one missed payment can lower your score significantly. And if the loan ends up in collections or court, the damage may last for years, even after the debt is resolved.
This can affect your ability to refinance your home, apply for a new credit card, or secure a personal loan, which is particularly troubling for older adults approaching retirement.
3. You Might Be Named in the Lawsuit
If your child is sued and you’ve cosigned, you may be named in the lawsuit, even if you had nothing to do with the circumstances that led to it. Creditors and debt collectors can sue all parties listed on the loan agreement, and courts will treat you as equally liable.
In some states, a judgment can be entered against you without much fanfare if you fail to respond promptly. You may wake up to a garnishment notice or property lien simply because you didn’t realize you were included in the legal proceedings. Being named in a lawsuit also means legal fees, often thousands of dollars, even if you eventually settle or the case is dropped.
4. Settling the Debt Could Cost You Long After Your Child Walks Away
Let’s say your adult child gets sued over a cosigned debt and disappears, emotionally or financially. It happens more often than people like to admit. If they stop communicating or can’t pay, the creditor turns to you.
At this point, you might be forced to settle the debt yourself, either in one lump sum or over time. This financial burden can linger long after your child has moved on, possibly even starting fresh through bankruptcy while you’re still on the hook.
Worse, if they file for bankruptcy and you don’t, your obligation doesn’t disappear. The creditor can’t touch them anymore—but you remain fully liable.
5. Legal Consequences Can Impact Your Retirement Planning
Cosigning is often done without thinking of the long-term implications, especially for parents nearing or already in retirement. But if you’re sued or forced to repay a large debt on short notice, your retirement funds may be jeopardized.
You could be forced to dip into savings, withdraw from retirement accounts early (triggering taxes and penalties), or delay retirement altogether. Some seniors even face foreclosure or are forced to downsize their homes because of debts that originated from their adult children. This kind of financial detour in your 60s or 70s can have lifelong consequences.
6. Your Relationship Could Suffer
While the emotional toll may seem less tangible than financial consequences, it’s no less real. Many parent-child relationships fracture after legal or financial crises, especially if one party feels betrayed or burdened.
The pressure of being sued or targeted by creditors can quickly turn a loving relationship into a hostile one. Resentment builds. Communication breaks down. And what was once a gesture of trust becomes a source of deep regret.
In some cases, families stop speaking altogether. A ruined credit score or an emptied savings account can heal in time. A fractured family might not.
7. You May Have Limited Legal Recourse
You might think, “If my child is the one who didn’t pay, I should be able to get my money back.” But in reality, suing your own child to recoup losses is a messy, emotionally charged process that few pursue successfully or otherwise.
Even if you do sue and win, collecting the money is another matter entirely. If your child is already facing a lawsuit, chances are they don’t have the assets to pay you back anyway. So while you technically could file a claim, in most cases, you’ll be stuck paying and absorbing the consequences while your legal options amount to little more than paperwork and heartache.
What You Can Do to Protect Yourself Before and After Cosigning
If you haven’t cosigned yet, but are considering it, stop and think hard. Ask yourself:
- Can I afford to pay off this debt if things go wrong?
- Will this impact my retirement, credit, or lifestyle?
- Am I willing to be financially tied to this person for years?
If you’ve already cosigned and your child is being sued, act quickly. Contact the creditor, explore whether refinancing is possible, and consult a consumer protection attorney. The sooner you act, the more control you retain.
It may also be worth reviewing your estate plan. If a judgment is issued against you, certain assets may be protected in retirement accounts or trusts, depending on state law.
When Cosigning Becomes a Legal Nightmare for Parents
What starts as a simple signature on a loan form can quickly snowball into a full-blown legal and financial disaster. While helping your adult child might feel like the right thing to do in the moment, the long-term consequences of cosigning are often underestimated.
From lawsuits and ruined credit to fractured relationships and delayed retirements, the fallout can be devastating. And unfortunately, these issues tend to surface when your own financial flexibility is lowest, just as you’re approaching or navigating retirement.
Before you cosign, ask whether your future self can absorb the worst-case scenario. Because once your name is on that dotted line, it’s not just a favor. It’s a financial entanglement that could come back to haunt you.
Have you ever cosigned for a loan? Would you do it again, or have you faced unexpected consequences that changed your perspective?
Read More:
6 Reasons You Should Never Cosign (Even for Family)
Avoid Costly Mistakes: The Right Way to Use a Cosigner Release Form
Riley Jones is an Arizona native with over nine years of writing experience. From personal finance to travel to digital marketing to pop culture, she’s written about everything under the sun. When she’s not writing, she’s spending her time outside, reading, or cuddling with her two corgis.
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