Credit Union - Refuse to reduce loan repayment

sally365

Hi,

My mother pays back €140 a week on her loan, her loan stands around 6k and she has savings of about 1.2k.

She requested to only pay back €100 a week, and they threw loads of paper work at her.

She goes into the bank and pays back her €100, but theres now interest been added to her account.

Why are they making it so difficult for her? she's never missed a repayment in her life.

Do you have any advice? Do these forms need to be filled in? - A huge list of her expenses in her personal life...seems OTT as €140 is a lot! and why not let her reduce her repayments, arn't longer loans more beneficial for the credit union?

Jack Kyle

Could she ask them to offset the €1.2k against the €6k, thus reducing the size of her loan and her repayments?

sally365

They said she couldn't as it was ''security'' on the account.

I'm going to organise a meeting with her and the manager in the credit union, would there be anything else I could suggest.

What really annoys me is the fact she has never missed a payment.

Pro Hoc Vice

sally365 wrote: »

Hi,

My mother pays back €140 a week on her loan, her loan stands around 6k and she has savings of about 1.2k.

She requested to only pay back €100 a week, and she threw loads of paper work at her.

She goes into the bank and pays back her €100, but theres now interest been added to her account.

Why are they making it so difficult for her? she's never missed a repayment in her life.

Do you have any advice? Do these forms need to be filled in? - A huge list of her expenses in her personal life...seems OTT as €140 is a lot! and why not let her reduce her repayments, arn't longer loans more beneficial for the credit union?

While I am a supporter of the CU ideas they are sadly the worst to deal with if things go wrong. Best bet is to have a full breakdown of income and expenditure at meeting and explain your case fully.

Jack Kyle

sally365 wrote: »

They said she couldn't as it was ''security'' on the account.

I'm going to organise a meeting with her and the manager in the credit union, would there be anything else I could suggest.

I could be wrong, but something in the back of my head tells me that they have to offset the savings against the loan if it's requested.

Check out askaboutmoney.com

It's good for stuff like this.

wmpdd3

The issue is that your mother is paying. They will not offer anything until she is not paying.

Her loan is probably over 5 years, they hate to give loans for more than that, if she want to restructure it they will only consider 60 months repayments.

From their point of view she has signed an agreement to pay back with in the agreed amount of time unless there has been a massive difference in their circumstances they are not willing to cancel that agreement.

If there has been a change in circumstances then the 'financial statement' (the paperwork they gave her) will detail this. with out filling this out they will not budge.

There is a simpler version of this form on the mabs website if she'd like.

Her best best is to fill out the form and see how her financial picture looks, if it looks like she cant afford her repayments then they will have a look at her case. If it shows she can pay but would prefer not to they will not entertain a reduction.

Little Sunshine

I had a similar issue with my CU & never missed a payment - I was actually ahead on payments- but was unemployed for a few months and couldn't make the full repayments - I requested that the payments be reduced and spread over a longer period of time - I got handed a lot of paper work too so I basically did out a spread sheet of my income and expenditure for the full year. Include everything - like car tax, petrol & insurance, health ins, ESB, Phone, home heating oil, food, d household charge, etc. I did it for the full year then broke it down by month, then week - I gave it to them and said this is all I can afford to pay back at the moment. I had to make reduced payments for 4 months before they would re-consider a restructure - eventually I got the restructure and am paying back as normal now - but it did take a while to get things sorted. Best Advice - have all your work done before u meet them

Trish56

I think the issue is that you mother applied for a loan and this was approved based on her income and circumstances at the time of application and she agreed payments of €140 per week. She now wishes to reduce these repayments to €100 per week this is a reduction of €2080 on what was agreed and will show up as arrears on her account.

Has her circumstances changed since she applied for the loan, if so the CU have to ask her to complete a Standard Financial Statement (SFS) and submit it to their lending department for approval.

Credit Unions are now regulated by the Central Bank and have to keep their arrears to a certain level and they are also answerable to the Board and more importantly to their Shareholders whose money they lend out.

She made a contract with the credit union to pay back €140 per week and she has now breached that agreement by only paying €100 per week. I would not advise your mother to stop paying as this will more than likely show up on the Irish Credit Bureau and will affect her credit rating in the future. If she wishes to reduce her repayments she must complete the paperwork and submit for approval.

Anyone

Welcome to the world of an highly regulated financial system. These are all regulations enforced now by the financial regulator.

Word of warning to anybody looking to refinance a loan these days. The financial regulator has imposed a restriction on anybody who does it which means they can not get any further credit until the loan is cleared.

Kennie1

I have a friend who's wife ran into some financial trouble a few years ago. The credit union were very aggressive in their approach to recovering their monies. They asked me for advice at that time so I tried to help them as best I could.

If your Mum wants to reduce her weekly payments by agreement she must complete a standard financial statement and a letter outlining her new proposal to pay €100 per week. She should also include the following letter addressed to the chair person and credit committee

Re: Set off of share balance against arrears

To Whom It May Concern:
I hereby give consent and request that you set off all my shares/deposit and accrued interest in excess of €200 against my loan.

You are permitted to do so under Section 32 (5) of the Credit Union Act, 1997 as detailed below:

32.(5) Where a member of a credit union is indebted to the credit union and consents in writing to the credit union acting under this subsection, the credit union may, by way of set-off against the indebtedness, withdraw any of the member's shares or deposits; and such a withdrawal may be made notwithstanding anything in subsections (2) and (3).

Yours truly,

¬¬_______________

Her CU did not want to do this and refused to play ball. She then sent in a formal complaint letter stating that the board of management was not acting in the best interest's of its member by charging 8% interest on the loan and only applying 0.1% interest on her share capital and that the CU was not complying with Section 32 (5) of CU act and that she wanted a formal responce letter so as she could make a complaint to the FSO.

When she submited the complaint letter she was requested her to call into her CU office to discuss this but she refused to do this and again reminded them that they had only 5 days to acknowledge her complaint.

The following day she received a letter with a share with drawal and loan lodgement slip.

Point to note about restructuring: If she took out the loan pre 2010 she did not give the CU permission to report arrears to the ICB so if she decided to just give the CU €100 per week (whitout their agreement) it would not affect her credit rating and to be fair the CU would probably be delighted to be getting this amount provided that your mother can prove that she cannot afford €140 per week.

If she decides to restructure the loan she will have to sign a new loan agreement which she will have to agree to the CU reporting the restructure and also if she missed any repayments.

Good luck!