Christian Topic: Surety
November 16, 2004 - by Crown Financial Ministries

If people can get out of surety, they should. But if not, then work at reducing the liability and paying off the debts early.
 
In a literal sense, surety means to deposit a pledge in either money, goods, part payment, or the like, for a greater obligation. It means taking on an obligation to pay later without a certain way to pay. "A man lacking in sense pledges, and becomes surety in the presence of his neighbor" (Proverbs 17:18).

Why is surety wrong?
Obviously, surety is not a biblical law; it is a principle. A principle is a biblical guide to keep you on God’s path and out of the world’s traps. You don’t get punished for violating a principle (unknowingly); you suffer the consequences. The consequence of violating the principle of surety is that you presume upon the future. In other words, when you sign surety for a debt, you pledge your future. "Come now, you who say, ’Today or tomorrow, we shall go to such and such a city, and spend a year there and engage in business and make a profit.’ Yet you do not know what your life will be like tomorrow. You are just a vapor that appears for a little while and then vanishes away" (James 4:13-14).

Cosign
Practically speaking, when you cosign a note for someone else, you allow him or her to borrow beyond the ability to repay. Why do you suppose that a banker requires a cosigner? Usually because the person borrowing is a high risk and lacks the ability to repay under certain circumstances. Many Christians sign for the debts of another. What happens then is, if the borrower cannot repay and the cosigner has to pay, a friendship is lost. "He who is surety for a stranger will surely suffer for it, but he who hates going surety is safe" (Proverbs 11:15).

Home mortgages
If surety is taking on an obligation to pay without a certain way to pay it (and it is), virtually every home mortgage is surety. Some states have laws that prohibit mortgage lenders from collecting a deficiency on a home mortgage, but most do not. The only thing that has kept most lenders from suing a defaulting home buyer is that inflation was driving up prices and there were few actual losses. However, many home buyers in states where prices have dropped during the last few years have been sued for defaults. It is quite possible that economic circumstances in the future could place many others in jeopardy. They will find that assets they thought were debt free are actually pledged as surety against their home loan or another mortgage loan.

Appreciating versus depreciating
It has often been said, "I know you’re not supposed to borrow for depreciating items such as cars and clothes, but it’s okay to borrow for appreciating assets because they’re always worth more than you owe." God’s Word doesn’t say that it’s bad to sign surety for a depreciating item but acceptable for an appreciating item. It says that if you sign surety, eventually you’ll suffer. "He who is surety for a stranger will surely suffer for it" (Proverbs 11:15). Avoid surety whether on appreciating or depreciating items.

Conclusion
The question is often asked, "What if I am already signed as surety?" You can only do what you can do. Fortunately, God doesn’t expect more out of us than we are capable of doing. If you can get out of surety, you should. If you cannot, work at reducing the liability and paying off the debts early.

© Copyright 2004, Crown Financial Ministries. All rights reserved.

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