Aib debt

shay1604

Hi
I'm in a bit of a pickle with my aib loan. Where to start?
Myself and my partner took a loan in 09/2009 to the value of 15000 to be paid back over a 5 yr period and in 04/2011 I lost my job and contacted a company called cornerstone who said that they would come to an agreement with aib on how much a month we could pay back. Our original monthly payment came in around 305 and for five months with cornerstone we lowered our payment to 120 a month. We realised at that stage that cornerstone seemed to be not paying aib as we were receiving letters from aib saying our loan was unpaid . So we ceased agreements with cornerstone and contacted aib to come to some sort of arrangement.
Aib said the best they could do was restructure the loan and we felt like this was our only option and offer that aib seemed to entertain. So reluctantly we agreed and now it's all gone to hell. A 15000 loan originally was gonna cost us 18500 to pay back over a 5 year period and after the restructure it is close 21000 over 7 and a half year period , basically we missed 5 months with cornerstone ( even though we paid 600 in those five months) and now it feels like we are being punished. To date we have paid almost 15500 back and still owe 5500 which I think is ridiculous and my partner is only in part time work so we are struggling to keep up with repayments.
Can someone please offer any help or advice as we have no problem paying a debt we owe but basically for borrowing 15000 they are charging nearly 6000 interest which in my eyes is unacceptable.
Thanks in advance
Seamus

Kenno90

Wait, This company cornerstone said they would negotiate a deal with AIB to provide cheaper repayments. Then instead of paying the bank the cheaper repayments , you paid them to cornerstone. That doesn't seem right.

What did they say when you rang them about the missed payments?. They are part to blame for this mess but in all honesty is looks like you were scammed.

There is not much you can do with the added interest, The restructure decreased the monthly repayments but increased the loan duration. It's the same with any loan, the quicker you can pay it back the more money you save on interest.

Find out how much the principal loan amount is (The amount of the loan you still owe, minus the interest). See if you can borrow that from family and work out a repayment plan with them. That way the bank will be paid off and the repayments to the family wont have interest (if they are nice to you )

Good Luck

shay1604

Hi thanks for the reply.
Cornerstone contacted aib directly and agreed with aib the monthly repayments. When we rang aib about the letters they were they said they would sort it out over the phone and that they had had contact with cornerstone about the repayments, they also said that they were automated letters sent from head office in Dublin.
Our families wouldn't be in the position to hand out that amount even though there would be no interest . I have been paying the loan for 5 and half years and we still owe nearly 5,500 on the loan. In total we will be paying nearly 6000 in interest. I have contacted MABS and am awaiting an appointment.
What are the consequences of stopping payments as I deem this highly unfair as AIB had agreed that cornerstone had contacted them and we bullied into restructuring our loan. I can't justify paying nearly 6000 in interest. I have already to date paid just over 14800 back on this loan and still have nearly 2 and a half yrs left of paying 241.75 a month which I really can't afford.
Thanks
Seamus

Kenno90

Hey Seamus,

I feel for you, I really do

So cornerstone were in fact paying the loan (€120) every month, it was just a misunderstanding that AIB said they weren't getting the repayments?

I just want to be sure that you didnt waste €600 euro of your money, if that €600 never made it to AIB then i'd demand it back from cornerstone.

Contacting MABS is a great start to dealing with this. See what advice they give you and go from there. They would be a lot more experienced with this than i would

Also by stopping payment on the loan would likely affect your credit rating, or worse they could hand the loan over to a collections agency and they could turn up at your door (but that really is worse case scenario)

BazzaDP

On the Cornerstone issue we really don't have enough information to help here and there are too many unanswered questions: Did they effectively take your €600 and run? Why were you paying them instead of AIB as agree with above poster that that seems odd? Did AIB accept that Cornerstone were going to paying them (I don't see why they would)? Why haven't you contacted Cornerstone? How were Cornerstone due to get paid for their work or were they doing it for free? Why do you seem upset at AIB (who it seems have at least tried to help by restructuring) but not Cornerstone (who seem to have scammed you from the facts we have)?

Separate to that is the interest issue. Using an interest calculator you appear to be paying an APR of 9% this would equate to the interest amounts you describe and it looks like if you'd taken the loan out over 7 years originally it would have cost you that amount too so bank doesn't seem to be ripping you off from a quick calc (though difficult to say without details).

Now is 9% APR "fair"? Well that's very difficult to say. It doesn't seem ridiculous for sure but doesn't seem super cheap either. You can't borrow money for free and the rate you pay will be based on how likely you are to pay back in full - and the cost to the bank of getting hold of that money for you. I'm presuming this is an unsecured loan so that will be more expensive (if it's secured against your home or anything else then do NOT even think about just stopping payments without seeking financial advice). Other than that the bank will have looked at your ability to repay at time of loan (would you have struggled to pay from the get go), and if your circumstances changed (would you have struggled to pay if you were out of work for some time - as it turned out you were). Based on all that they'll decide whether to lend to you and at what rate.

So "fairness" doesn't really come into it, and it seems that AIB haven't made a big deal about the fact the loan wasn't repaid for 6 months and have restructured it over, what looks to be, the same interest rate to try to help so j don't think you've too many grounds for complaint.

If you genuinely can't afford even the reduced payments then there are options (up to and including bankruptcy in the extreme case but don't think that's relevant here) but to just say "the bank got their money back with a little bit of interest so they should be happy with that" isn't going to cut it I'm afraid.

shay1604

Hi
Thanks for the reply.
Well to start cornerstone are now dissolved so I can't contact them. They were paying aib to the sum of 120 a month so instead of getting 305 a month they were getting 120 for five months. I was told but cornerstone that I didn't need to contact aib as they would do all that for me and sort out payments. I was paying cornerstone a set sum a month and they were taking a percentage each month for their services. I was promised by cornerstone that no come back would be on me ( gullible I know but I was in dyer straits at the time and trusted them). To be fair they paid everything when they should have and it was my understanding that they had agreed these terms with my creditors but I have a feeling they just said to the creditors that that was all they were gonna get.
Moving on to aib I'll start by saying that of course I don't think im getting money for free and I stated already I have no problem paying what I owe but I'll give you a run down of exactly what the restructure was. For easier typing I'll round figures up. At the time of the restructure we owed just about 11500 on the loan and about 14500 with interest. After the restructure we had a new loan of 14500 with another 2400 interest on top of it. Yes I understand that they were trying to "help" but I was only 5 months behind and only 900 in arrears . At the time this was our only available option as I did not know there was an interest only option on an unsecured loan I thought that only applied to mortgage loans.
You say if I borrowed it for 7 yrs I would be paying that interest but I didn't I borrowed for 5 yrs and was told my only option was to restructure my loan.
You say that there was no grounds for fairness here and that basically aib did everything they could to help, well I disagree if I had the interest only option I know it would have added to the term but not the interest. When they restructured my loan they cleared it with their own money ,charged full interest on it and then gave me another loan to the value of what full interest was and then charged interest on that again.
I was informed of none of this when they told me about the restructure I was basically told that the term would be, and I quote "a bit longer but not by much".
So ya when you put it your way there does not seem to be fairness in it, but in my situation aib had other options to offer and never informed us of them they basically offered the only option that would make the most money for them so I can't agree that the help they were offering was in my best interest.
Sorry to sound bitchy but I think there was better ways of dealing with this and I was not informed of other options that they could have offered. Yes I agree that I had blinkers on and am paying the price now and should have read and re-read the terms and I'm paying for it now but at the time and now I had mortgage arrears ,my electricity was about to be cut off etc, etc. So reluctantly I signed as I felt instead of paying 305 and arrears the offer of 242 seemed like my only way out.
Thanks
Seamus

Cushie Butterfield

Have you read this article dated Nov 2012?, especially this bit: "If customers find that payments made to Cornerstone have not been passed on to creditors and their account is not up to date, they should consider contacting An Garda Siochana," the Central Bank said.''

http://www.independent.ie/irish-news/bank-concerned-over-debt-firms-handling-of-client-cash-28940537.html

I may be misreading your posts but have you established that AIB definitely didn't receive the payments you made to Cornerstone?

shay1604

Hi ya
Thanks for the link yes I read it but when I rang my local branch in clonmel they confirmed that they were receiving payments from cornerstone, exactly what cornerstone said they were paying them.
Thanks for the reply
Seamus.

shay1604

Sorry for confusion here my first post gave the idea that cornerstone weren't paying at all. I just want to rectify that they were paying but I don't think aib agreed to this amount and they basically told aib that was all they were getting, I tried ringing about what cornerstone had said or agreed but nobody could answer me. I was thrown from pillar to post when I rang about the agreement and nobody seemed to be able to answer me about it. When I rang my local branch they confirmed that they were receiving payments from cornerstone so I took it to mean that they had agreed to it.
Sorry for the confusion on this point.
Thanks
Seamus

Cushie Butterfield

shay1604 wrote: »

Sorry for confusion here my first post gave the idea that cornerstone weren't paying at all. I just want to rectify that they were paying but I don't think aib agreed to this amount and they basically told aib that was all they were getting, I tried ringing about what cornerstone had said or agreed but nobody could answer me. I was thrown from pillar to post when I rang about the agreement and nobody seemed to be able to answer me about it. When I rang my local branch they confirmed that they were receiving payments from cornerstone so I took it to mean that they had agreed to it.
Sorry for the confusion on this point.
Thanks
Seamus

OK, so basically forgetting totally about Cornerstone you subsequently arranged a restructure with AIB?

There may not have been an interest only option available to you at that time, & if there was it more than likely would have been subject to a review every few months, so it's not really 'a given' that you received inproper advise from AIB at that time.

I think your best bet would be to wait for your MABS appointment. Their advisors are well versed in these matters & will be able to go through your entire financial situation with you & can advise & help you on how best to proceed going forward, & could possibly contact AIB on your behalf to find out what options should have been made available to you at the time, & what options may be available to you now.

Frynge

shay1604 wrote: »

You say if I borrowed it for 7 yrs I would be paying that interest but I didn't I borrowed for 5 yrs and was told my only option was to restructure my loan.
You say that there was no grounds for fairness here and that basically aib did everything they could to help, well I disagree if I had the interest only option I know it would have added to the term but not the interest. When they restructured my loan they cleared it with their own money ,charged full interest on it and then gave me another loan to the value of what full interest was and then charged interest on that again.
I was informed of none of this when they told me about the restructure I was basically told that the term would be, and I quote "a bit longer but not by much".
Seamus

I'm not sure you full understand how the interest on a loan works. The €3500 interest to be paid on the €15000 loan is not calculated at the start of the loan but is calculated each month when a payment is due.

Using the numbers you provided your monthly repayment was €305 made up of

Month Interest. Principle. Remainder

Jan $101.38 $203.56 $14,796.44
Feb $100.00 $204.94 $14,591.50
Mar. $98.61 $206.32 $14,385.18
Apr $97.22 $207.72 $14,177.46
May $95.82 $209.12 $13,968.34
Jun $94.40 $210.53 $13,757.81
Jul $92.98 $211.96. $13,545.85
Aug $91.55 $213.39 $13,332.46
Sep $90.11 $214.83 $13,117.63
Oct $88.65 $216.28 $12,901.35
Nov $87.19 $217.74 $12,683.61
Dec $85.72 $219.22 $12,464.39

So after one whole year you would have paid the bank €3660 but just over €2500 of this actually came off of what you had borrowed. If you had gone interest only you would have inevitably paid more interest than the €3500 you thinking at the start.

BazzaDP

Hi Seamus,

First up I realise this is a difficult situation for you and am not trying to be bitchy either so apologies if my first post came across as harsh. I'm just trying to give a realistic view of the situation.

I did not mean to apply AIB did everything they could do, or that they were doing this purely in your best interests and not also their own. AIB will not work in your interests - they will always work in their own. In my opinion what AIB have done so far is reasonable, has relieved the burden off you a little and seems like a good option - despite the fact that that yes, this means it's going to cost you more in the long run.

AIB could have far stricter, with fines, restructuring the loan for a higher rate of interest, called in the loan immediately or taken you to court over it. Would any of those have helped them get their money back? - Almost certainly not, which is why they did not go down that road and instead worked WITH you on a restructuring.

Could they have done more? Possibly. They could they have extended the term by 2 years interest free, changed to an interest only option, written off the arrears so far or written off the outstanding loan completely - however, I'm sorry to say, I don't think any of those options are realistically something they would consider.

No matter the terms of the original loan, you ARE now attempting to borrow the money for 7 years, but worse than that, are in a weaker position than when you originally got the loan in that you are behind in payments already, and are earning less, and so would be unlikely to get this loan now. So with that in mind I hope that you see that AIB have been somewhat generous in allowing the restructure to happen at all (again mostly because they see this as the best option for themselves too).

You seem to think you've been lumped with a big chunk extra onto your loan with this restructure but that's not the way it works. The interest will be calculated daily. The extra interest you've been shown is a total cost if you stick to the terms of this restructuring and pay it off over the remaining two and a bit years. If you pay it off now, you'll not pay any of that extra interest. If you pay it off in 1 year you'll pay half of that extra interest. So it's not a lump sum penalty for restructuring - it's a daily cost of the borrowing.

I suggest you get back in touch with AIB either directly or via MABs and see if the loan can be restructured again with more generous terms for yourself but, for the reasons I've given, I'm not sure that's likely. Not impossible but unlikely. You'd need to show the current repayments are unrealistically burdensome based on your incomings and outgoings.

And I still think you're being way too kind to Cornerstone. They don't seemed to have helped here at all. They've not explained what they were doing to you, seem to have acted without AIBs agreement and basically just told you you to pay less and then took a cut of that lesser amount. Unless AIB restructured for them, this basically means you've been massively underpaying AIB and racking up further interest (and possibly fees).

shay1604

Hi again
Firstly I'd like to say thanks for taking the time to even write to me about this and it is very much appreciated to have an honest opinion. You're right when I take a step back and look at the other end of the scale as in what aib could have done I did seem to get away lightly, I never looked at it from that side .
I tried contacting cornerstone about it and they said at the time that they did exactly what they said they were going to do which I suppose they did and I had a few harsh words with the director at the time we ceased agreements with implying that I was not happy with the service they had provided and that I thought it would be dealt with more professionally than what was done.
I have an appointment with MABs on the third of Feb so I'll see what my situation is from there, and update on what will happen.
I'd like to thank you again for your opinion in my matter it's appreciated that you took the time and I do not have a biased opinion ( although some part of me is looking for sympathy , I'm only human lol) and an honest opinion is much more favourable before I approach aib instead of going into them with my feathers ruffled.
Thanks again
Seamus

shay1604

Hi
Thanks for taking the time to comment on my predicament it's very much appreciated.
I have an appointment with MABs on the 3rd of Feb so I'll see where that takes me and thanks for your opinion I see now that aib could have been a lot worse in my situation so hopefully we can come to some sort of another agreement with them. Oh by the way can anyone tell me do I have grounds to pursue cornerstone even though they are dissolved now and what steps I would need to take.
Thanks again
Seamus

BazzaDP

shay1604 wrote: »

Oh by the way can anyone tell me do I have grounds to pursue cornerstone even though they are dissolved now and what steps I would need to take.

This is really, really, really not worth the effort even if they were not dissolved - and especially now they are. Ultimately it seems did what they said they'd do - I just don't think that was very much. Then again you seemed a bit stressed and disorganised so not sure what you agreed to nor what they charged you.

If they'd kept all your money and not passed on to AIB, or it had been a lot more money, that would be different but even then unlikely to be worth pursuing since they're dissolved.

Chalk this one up as a mistake, learn from it, and move on and instead concentrate your time and efforts on solving your loan issue.