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Co-Signed Lease With Friend Who Broke Lease

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Mark Cappel
UpdatedMay 20, 2024

I co-signed a lease for a friend who later broke the lease. This is now harming my credit score. What can I do?

I was a co-signer for an apartment lease for a friend and he had to move out due to losing his job. He had to break the lease, but stated that he would pay off the remaining balance to the apartment. Since then, the account went to a collection agency who is reporting the account on both credit bureaus. My question is; if my friend wrote the collection agency and told them that he was taking sole responsible for this account would they or should they remove the account from my bureau report? I do not have the money to pay this account and am trying to apply for a mortgage for myself and my son. I would like to know how I can get this off my report without paying for it.

Many creditors, such as your friend's former landlord, require that applicants with past credit problems have someone with a better credit score agree to be responsible for the debt if the primary account holder defaults on the agreement.

Because your friend broke his lease, he is liable to the landlord for the penalty stipulated by the lease agreement in cases of early termination; depending on the lease terms and the laws in your state, he may owe the entire balance due under the original lease agreement, or some percentage of that amount.

As the cosigner, you are liable for the debt if he is unable or unwilling to pay it, and it is likely that the collection agency will continue its collection activity, such as calling you, sending dunning notices, etc., until the debt is paid. The creditor may even file a lawsuit against you to obtain a judgment for the amount owed, which could result in wage garnishment, a levy on your bank account, or other enforcement action, depending on your state's laws related to the collection of judgments. The damage this unpaid debt is doing to your credit rating is a relatively minor concern compared to the other potential consequences that could result from failure to pay the account.

Resolution options

Unfortunately, the only reliable way to have a valid derogatory account removed from your credit report, and to prevent additional collection activity, is to make negotiate repayment terms with the creditor or the debt collection agency. I strongly encourage you to contact the creditor to try to negotiate affordable monthly payments; in return for your committing to these payments, you should ask the creditor to remove its derogatory item from your credit files.

If you can offer to pay a lump sum, say 40% to 50% of the outstanding balance, the creditor may be willing to settle the debt and forgive any remaining balance. You may want to speak with your friend about the problems this unpaid account is causing you and your family; you and he may be able to pool your funds to make monthly payments or to save up for a settlement. Although this was your friendÂ’s apartment, the resulting debt is negatively affecting you both, so I encourage you to work together to find a common solution to your mutual problem. offers many resources designed to help consumers negotiate with creditors.

Do your homework: Review the contract carefully

I strongly encourage you to review the original lease terms to verify that the amount the collection agency states you and your friend owe is consistent with the terms of the original lease. The collector should be able to provide you with an itemized account statement showing how all amounts it claims you owe were calculated; the collector may not have the information immediately available, but should be able to obtain it from the property management company at your request.

If you or your friend thinks that the creditor is claiming an outstanding balance which is higher than what you actually owe, you should consider disputing the balance with the collection agency.

Under the Fair Debt Collections Practices Act (FDCPA), a federal law that seeks to protect consumers by reigning in abusive collection tactics, collection agencies are required to provide proof of the validity of debt if the alleged debtor disputes debt in writing within 30 days after receiving the collector's first dunning notice.

Once you dispute the debt, the collector is required to cease all collection activity until it provides you with evidence that the debt is owed by you and that the balance claimed is accurate. You can dispute the debt after the thirty days provided by the FDCPA, but the collector is not required to stop its collection efforts while it is investigating the dispute.

To learn out more about disputing debts with collection agencies, and when filing a dispute may be appropriate, you can visit the debt self-help center.

Risks of co-signing a loan

Because of the risks associated with being a cosignatory on a loan, lease, or other debt, I generally discourage the practice. I have seen far too many people who have cosigned loans for people whom they trusted end up in serious financial hardships when their friend or loved one failed to pay the debt as promised.

In most cases, the primary borrower defaults on the payments through no fault of his own, as happened to your friend when he lost his job. Regardless of the reason for the default, the cosigner will likely be forced to pay the debt, or else be subject to years of derogatory credit reporting and collection activity. When considering cosigning for any debt, you should assume that you will be required to pay the debt yourself, and only agree to cosign if you know that you could pay the debt in full tomorrow without causing you or your family any financial hardship. If you do not have sufficient savings to pay off the debt for which you are cosigning, then it is probably imprudent for you to make such a potentially costly commitment. (See Will Co-signing On a Loan Hurt My Credit Score? for more about co-signing contracts.)

To learn more about credit, credit scoring, and credit reports, I invite you to visit the credit resources page. I wish you the best of luck in resolving this debt.

I hope that the information I have provided helps you Find. Learn. Save.



Did you know?

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Auto loan debt was $1.607 trillion and credit card was $1.129 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

The amount of debt and debt in collections vary by state. For example, in Tennessee, 32% have any kind of debt in collections and the median debt in collections is $1892. Medical debt is common and 18% have that in collections. The median medical debt in collections is $888.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.