The Danger of Securing Another Person’s Debt

Broken Security

Broken Security

There’s danger in putting up security for a stranger’s debtit’s safer not to guarantee another person’s debt. (Proverbs 11:15)

The Bible amply supplies us with financial advice and here we have yet another piece of sound advice from one of the wealthiest men in the history of Israel.

When we put up security for a stranger, we are placing the welfare of our own families, our own peace, and our own financial obligations at the mercy of another person’s financial integrity.

It is chaining yourself to the character and circumstances of someone else. Whatever he does wrong from a financial perspective will have a direct impact on you and your family. Even if it is a person of integrity, unforeseen setbacks may come his way and suddenly they become your setbacks too. Suddenly, all his troubles become the troubles of you and your family too.

Therefore, we are reminded often in Scripture to not put up security for another person’s debt. According to the author of Proverbs, King Solomon, a person who does so will surely suffer. Being as wealthy as he was and having had such great insight into human behavior, I believe he was given the authority to advise others on sound financial principles. It will serve us well to heed his advice.

The reason the proverb refers to ‘stranger‘ is because it wants to make clear that it is folly to put so much at risk for a person you nothing of. This could also be a friend, but whose financial integrity is not known to you. Sometimes we may think we know a person but their financial affairs are really not known to us at all.

It is therefore wisdom to avoid signing security for someone else’s debt, regardless of how well we think we know the person.

About Ula

I live near the beautiful city of Cape Town in South Africa. I love writing, reading, cooking good food, gardening, nature and animals. We are a close-knit family who enjoy doing things together.
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3 Responses to The Danger of Securing Another Person’s Debt

  1. Pingback: Urdu Blog 223 – The danger of securing another person’s debtor | ChristianBlessings

  2. ptl2010 says:

    The advice given in Proverbs is very true as I have seen even siblings declared bankrupts because of a defaulting sibling whose loan or debt had been guaranteed and defaulted.
    There are instances however, where parents or siblings or relatives are “pressured” to give guarantees or repayment bonds for education loans, or other loans because of maintaining relationships. For these the following factors should be considered before accepting the risk of default:
    1. the amount guaranteed should be fixed and limited to a principal sum. with a cap if interest is included.
    2. the guarantor is in a financial position to “give” or “forgive” the loan should there be the need to convert it into a gift to the borrower in the event of a call on the guarantee. Parents who can afford to give the sum as a gift would prefer to give a guarantee which is a contingent liability rather than give the gift immediately.. There is a moral duty to complete studies if there is the guarantee rather than a gift. Cash gift in hand is easier to be squandered by the “borrower” whereas a loan from a financial organization is a measured release of cash according to disbursements for the purpose of the loan.
    Thank you Ula for reminding on the risk of being a guarantor as many lives have been affected by unexpected calls on guarantees for defaulting loans.

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