Do not be one who shakes hands in pledge or puts up security for debts;
if you lack the means to pay, your very bed will be snatched from under you. Proverbs 22:26-27

The principle to this proverb is obvious: guard against going in debt for someone else because you may very well end up paying the full debt.

A number of years ago an Indian couple befriended us and wanted us to vouch for them for U.S. sponsorship of some sort. We wrestled with it at the time and refused to sponsor them only because we really didn’t know them well at all. We lost friends in that process but I’m convinced it was the right decision.

Others I know have co-signed for loans for relatives, and are still paying those loans back. Those co-signers know very well the hazards of being in debt for someone else. It was win-win for those requesting the loans, and lose-lose for the co-signers.

My personal principle for loans is this: first, I never expect to be repaid, and secondly, it’s a gift and not a loan. If a person wants to repay, that’s up to them; otherwise, it’s a gift. Is it a perfect solution? No, but it bypasses a lot of the heartache and worry associated with loans.