The situation:
My brother called today to tell me he's 2 weeks away from losing his apartment in NYC, and is asking for me to be the guarantor on his lease so that he can keep his place.
The backstory: My brother has never been a plan for the future kind of guy (obviously). He got himself into trouble with credit card debt in his 20's and got bailed out by my parents (I'm told by my dad that he has since repaid them, and I believe him). About three years ago, he won about $100k on a gameshow, and has now blown through the majority of his savings. He has ~$7500 left in one stock holding (Purchased for $10k). He initially asked if he could borrow some cash to make rent without having to sell for a loss, which I refused, but the need for a lease guarantor if he is to keep his place remains. Financials are as follows:
Rent: $3100 for a 3br/2ba place in Manhattan.
He normally keeps roommates and charges them $1100 & $1200 respectively, making his share of the place $800/mo. His two current roommates are planning to be out at the end of this month, but he's never had issues finding roommates in the past.
He operates a cash business that he claims typically nets him $2000/mo, conservatively; potentially more if he worked at growing it.
There are some mental health issues in the mix with him (anxiety & depression--nothing psychotic).
My options: 1. Guarantee the lease. Insist he get counseling, & report his financials to me on a monthly basis.
2. Don't.
Option 1. Pros: Get to be the good guy, help out the brother in need & all that. Help him save face by not having to turn to the parents (who could also guarantee the lease if he asked & they wanted to). Help maintain some stability in my brother's life off of which he can hopefully build a future.
Cons: Risk of enabling (obviously). $18,600 liability if he completely defaults on the lease (unlikely, but possible), assuming he can get a 6 month lease. $37,200 liability if a one year lease.
Option 2. Pros: No risk of enabling, no liability.
Cons: No opportunity for me to help build a better relationship with my brother (at least not immediately). Potential loss of stability for him if he doesn't find a solution to keep his home.
He wouldn't be on the street or anything. He has plenty of friends, and in a worst case scenario, he can move back in with my parents (although I'm sure none of them want that--it probably wouldn't be a good situation for any of them, mental health wise). Living with them would also hinder his ability to operate his business, for various reasons.
While I consider this, I've asked him to draw up a personal budget for himself, and I'll post it if he does.