You had to get a co-signer on your mortgage because you had no credit, or even bad credit. This nice person enabled you to buy your home. You don't want to repay her generosity by ruining her credit, do you? Because if you don't pay that mortgage on time, the late payment shows up on her credit report and lowers her credit score. In addition, the lender can chase her and harass her to collect arrearages and late fees owed by you. Not nice. So here's what you do.

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1. Contact your mortgage lender. Get the paperwork going for a mortgage modification ASAP. Presumably you can't pay your mortgage because of some hardship that isn't your fault (if that's not the case, shame on you). If you are unemployed, new modification rules allow your lender to forbear or lower your payment for three to six months. All you need to prove is that you're getting unemployment compensation.

Contact your co-signer. You owe her the courtesy of informing her of what is taking place. She may want to help you make the payment to protect her credit rating. You should be funneling every available dollar toward paying the mortgage, not your credit cards, car payment, or anything else. You owe your co-signer that. You can help save her credit rating by bringing the loan current -- if you are current on your mortgage when you enter a trial modification, your reduced payments are reported to credit bureaus as current (as long as you make them on time). If you are not current when you enter a trial modification, the lender reports mortgage late payments for three months on your credit report and your co-signer's. This is highly damaging -- late mortgage payments cause bad credit and lenders see them as worse than almost anything you can do.

Consider Chapter 13 bankruptcy. This is the only way you can discharge debts and protect your co-signers. As long as you make your court-mandated payments, the banks will leave your co-signers alone. On the other hand, if you file for Chapter 7 protection, your co-signer immediately becomes fair game for your mortgage lender. Protecting her is the right thing to do.