Can someone advise me-Credit Union Loan ?

Adrianno28

Hi,
To cut a long story short, I have a loan with the Credit Union for €15,000 I was paying €94 per week until I was made unemployed (Sept 2012) after which I was paying €50 per week as agreed with the credit union. My account has gone into arrears because I was paying a small portion of the loan and the rest was going on interest (they told me). They called my up last week to see If I wanted to freeze my loan, they would withdraw my membership, take my shares of approx €3,000 against the loan and I keep paying the €50 as I was always doing until the loan is paid back or until I get a job and pay more if I want to clear the loan. I was told that after the loan is repaid I can re-join as a member and that this was the best option for me because If I continued I would be paying €50 per week (supposedly) until 2022 and it would cost me €7000 or more in interest. Is this the right thing to do>??? Also what are the negatives of this.. im sure my credit score will be shot to bits. Many thanks in advance:)

Adrianno28

Can anybody help?

wmpdd3

How can you afford €50 a week when you are only getting €188?

Did they ask you to complete a 'financial statement' where all you incomings and outgoings are detailed and at the end you should be able to arrive at a sensible repayment. Do you have any other unsecured debts?

Some CU are on the ICB, you can check on the ICB site, some are not.

Another 9 years seems very long for that loan at €217 a month. What is the interest rate.

If I continued I would be paying €50 per week (supposedly) until 2022 and it would cost me €7000 or more in interest. Is this the right thing to do

Are they offering to freeze all interest and charges until you pay it off, if so take the offer, seems good.

You really need to get all your paperwork and get down to MABS for a meeting. Have a looks the MABS website and see if you can follow the self service version of dealing with your debts.

I really don't understand the 'cancelling your membership and then reinstating it part.

P. Breathnach

Very often people who are struggling with CU loans wish that they could offset their shares against the debt, and are disappointed to find that it is difficult to make such an arrangement. You are having this offered to you on a plate. Take it, and thank them for being so constructive.

SJT1

I hope you're planning on going back to work before 2022, if so, take their offer and renegotiate new repayment terms with them when you're back at work

Adrianno28

wmpdd3 wrote: »

How can you afford €50 a week when you are only getting €188?

I really don't understand the 'cancelling your membership and then reinstating it part.

I cannot afford €50 per week but what can I do... its my loan and I have to pay something off it. They said they will basically take my membership away, put the share against the loan and freeze the interest ans keep paying what I can afford ( €50 )off it until its done. If I get work I can increase it every week to get it paid off faster and then become a member once again. I was worried about my credit score but I guess because I wasnt repaying the full €94 since 2012 that is in ruins now. This credit union is a member of ICB.

Is there any questions I should ask them whilst Im in there as I am not great with these sort of things? I cant get to MABS before Saturday when I have to sign off on this.

Adrianno28

SJT1 wrote: »

I hope you're planning on going back to work before 2022, if so, take their offer and renegotiate new repayment terms with them when you're back at work

Yes Im planning to go back as soon as I get a job ASAP

Adrianno28

P. Breathnach wrote: »

Very often people who are struggling with CU loans wish that they could offset their shares against the debt, and are disappointed to find that it is difficult to make such an arrangement. You are having this offered to you on a plate. Take it, and thank them for being so constructive.

Thanks ... yeah they are being very fair with me. I am grateful.

adam88

Adrianno28 wrote: »

I cannot afford €50 per week but what can I do... its my loan and I have to pay something off it. They said they will basically take my membership away, put the share against the loan and freeze the interest ans keep paying what I can afford ( €50 )off it until its done. If I get work I can increase it every week to get it paid off faster and then become a member once again. I was worried about my credit score but I guess because I wasnt repaying the full €94 since 2012 that is in ruins now. This credit union is a member of ICB.

Is there any questions I should ask them whilst Im in there as I am not great with these sort of things? I cant get to MABS before Saturday when I have to sign off on this.

First of all don't sign off on nothing until you talk to mabs simply so that thru can explain this is a good offer. The offer they are giving you is a very good offer instead of a few euros going off the principle now the full 50 is going off the principle ( plus any interest you have accrued)

With regard to your credit score if your credit union is icb member then it has being noted that you are in bad credit. This can be confirmed by obtaining a icb report costing you 6 euro.

50 is a lot for you to pay. 28 percent of your weekly income. Not to mention whatever other expenses. Tell them that you can't afford that but can afford maybe 20 or 30. ( basically whatever you can afford) remember its them that are going to lose out. They can't get blood from a stone and even if it does to go court nothing will happen you as you genuinely don't have the means to pay this loan. If I were your credit union I'd be damn happy to be getting 20 euros rather than zilch.

Basically what they are doing us writing off your loan and recovering whatever they can off you.

This reply might be all over the place as as I'm typing it off my phone. But if you have any queries don't hesitate to pm me. I might be able to clear things up a bit for you

The Engine Room

Firstly the Credit Union involved should have looked for a statement of means from yourself outlining income and expenditure. This will show them your current level of disposable income, after this has been done then they can come to an agreed amount which will service the loan and interest which may put the term on the loan back out to 5 or more years. After a certain amount of time, generally 13 - 15 weeks, the Credit Union may be able to reschedule the loan itself once you can prove that you can meet the agreed repayment. This reschedule is essentially be a new credit agreement so the arrears will disappear from your account. Thats assuming the Credit Union is in a position to do this, it may have changed with increased regulation!

Finally, each Credit Union has to hold a minimum of 25% of the outstanding loan balance as security, so once the loan balance is reduced over the next 2 or 3 years you can apply to have the shares offset against the loan. This will put a bit of a dent in it and also reduce the amount of interest you are charged.

Hope everything works out for ya!

wmpdd3

OP, I have gone through the process you have described above but my first mistake was to aggree to a monthly payment that I couldn't maintain without taking money from our food bill.

I then had to go into arrears and go through the whole process again, I got help from MABS but I just wanted the loan paid off as quick as possible. I made no arrangements for once off expenses that hit over the intermeeting 2 years.

I am now in a position that I cannot pay the second agreed amount and have to go through the process again.

So do you financial statement and decide on an amount that you can pay if you end up on €188 for the next 2 years. Hopefully you won't but thats the way you have to think.