Old unpaid loan

ali44

I was recently refused a car loan which was strange as I had just finished one last year. So I applied for my credit report.

There is a very old loan registered on it long story but it was a loan I got from the Credit Union 22 years ago and ran into difficulties a few years into it and I just buried my head in the sand.

Things were really rough at the time we both lost our jobs and had 4 kids and the mortgage was the priority. We struggled to put food on the table for years back then.

They stopped contacting me approx 10 years ago and because I have had a personal loan and a car loan approved in the last 5 years I assumed it was written off.

It's not it's still listed as active and outstanding.

Im actually mortified to contact them. I know I have to.

I'm wondering should I save and offer them a settlement figure? Or should I just ask for a payment plan? Don't even know what to say to them. I feel ashamed

It's 13 thousand outstanding (it was a 25,000 loan)

How would you approach this?

elperello

https://www.boards.ie/discussion/2058283858/old-unpaid-loan

Is that 13k including interest accrued to date or the sum you owed when you stopped paying?

ali44

That's the amount that is registered as outstanding on the credit register.

elperello

Assuming that you don't have that sum how long would it take you to save it ?

If it's years you are probably better agreeing a payment plan.

ali44

I've taken the bull by the horns and emailed them to set up a meeting. I'm going to see what they say.

I have 7000 in savings but using all my savings when my credit is so bad wouldn't be the best plan.

Payment plan is likely the best option.

Jim2007

To give you a bit of background...

When an institution writes off a loan it does not mean the you don't have to pay, it just means that they have decided it can be collected and will stop chasing it.

The EU directive on registering debt is slowly being implemented and that requires institutions to report unsettled debt and that includes debts that have been written off. This obligation only came into effect in recent times, so it is very likely that entry was not there the last time you got a loan.

The only way it will disappear from your record is if you paid it off or some how get them to agree that the debt is settled, which is very unlikely. The most likely out come is a reasonable payment plan.

ali44

I've spoken to someone in the CU today. I've a meeting set up for next week.

She said to think about a settlement figure and that due to the fact it was written off a long time ago they would also be very open to a settlement to close it off rather than a payment plan.

It will ultimately be their board that decides to accept a figure.

I'm going to offer 40% and see where we go from there.

ali44

https://www.boards.ie/discussion/comment/120228463#Comment_120228463

Interesting - credit register website states that if a loan is written off it's removed after 5 years.

Yet this CU listed a loan as active that was written off (years previously) the reason it was listed only in the last few years was a take over of the credit union.

My best way forward is to settle and repair my register it over time. Because it's listed as active it's going no where.

Jim2007

https://www.boards.ie/discussion/comment/120228855#Comment_120228855

I deliberately use the term settled debt to distinguish it from what is generally referred to as written off because the definitions are not the same as you have discovered. If they write it off in the sense required by the act it means they are giving up all rights to recover it and that is not something they are willing to do because they know if you every need an other credit facility you'll have to come back to them, it make take a long time, but you'll come back and in the mean time they'll take the tax break on it....

Jim2007

https://www.boards.ie/discussion/comment/120228836#Comment_120228836

I've been through a few of these negotiations in the past and while it is too early to get cookie just yet, if they no longer have all the documentation it may be very difficult for them to do anything about recovering the balance beyond what you are willing to offer them.

If it were me I'd let them do all the running, let them propose the settlement amount and an alternative payment plan, basically, you have their money and they have to try and get it back! Don't get rushed, don't get flushed and don't open your mouth.... just listen and figure out the lie of the land before you go offering anything. And when you do make an offer make sure there is a big gap between their proposal and yours, so there is room for manoeuvre.

Good luck and let us know how it goes.

ali44

Thanks for the advice. I think I would have gone straight in with an offer.

walterking

Fair dues for accepting it needs to be settled.

A reasonable offer will probably be accepted, but be prepared to go to €7500

ali44

https://www.boards.ie/discussion/comment/120230281#Comment_120230281

I think your right and it will end up nearer this mark.

Was talking to a friend who works in finance and she said similar to Jim to hold my cards at the first meeting and let them know that I'm interested in a full and final settlement but as it's a 22 year loan and a long time written off their books that any recovery is a bonus to them.

The access to credit is one aspect but my husband obtained the car loan for me so I've no real requirement for credit in the medium term.

More I want to settle because I carried a lot of guilt and shame about not paying it back and as time went on it felt too difficult to contact them.

Furze99

https://www.boards.ie/discussion/comment/120229310#Comment_120229310

And what about the morality of this advice? Does that come into it? This is €13,000 of ordinary everyday peoples money who saved their few bob in the local credit union and which was then lent out to the OP. And yet you suggest the OP plays hardball and see how little they can get away with paying? I suppose people who work in finance often don't see the wider picture.

ali44

https://www.boards.ie/discussion/comment/120231745#Comment_120231745

100% there is a moral aspect to it. It's actually one of the reasons I want to make amends, But at the same time this money has been long written off so any recovery is good for the members investment.

Jim2007

https://www.boards.ie/discussion/comment/120231745#Comment_120231745

It's very easy to be moral with other peoples money. Here we deal with financial advice, you want to have a moral discussion take is somewhere else.

elperello

https://www.boards.ie/discussion/comment/120231771#Comment_120231771

Fair play to you for making the effort and I'm sure the money will be gladly received.

Furze99

https://www.boards.ie/discussion/comment/120232134#Comment_120232134

Well I know what I would do. Particularly as this involves a credit union whose whole ethos is based on people in a community helping each other.

ali44

The settlement figure would need to be much more near to the owed amount more like 11,000. Their board isn't keen on too much of a write down as mentioned here already it's members money ect..

The other option offered was a repayment plan without interest and they would reopen my membership after 12 months of regular payments to allow me to rebuild shares and open up credit options to me again after it was cleared, so while my official CCR credit record would take additional years after clearing to repair they would look at it differently. I don't plan on needing more loans as I have a rule now to only borrow for a car.

Going with that option it's very fair and a clear plan to clear the debt and start fresh with them, he treated me with respect and openness and zero judgement.

Thankfully we are in a better position with our financial situation so I can now sort this out.