# need help with rules of a credit union as relates to their loan and guarantor policy.



## Daemon (19 Mar 2011)

Can someone please help me with the rules of a credit union as relates to their loan and guarantor policy. This is my story, sorry if it's a bit long.


Back in 2007, my wife and I were expecting our first baby, but we had gotten into a lot of debt. 

2 credit cards
multiple personal loans
wedding loan
car loan 

The loans totaled about €100,000, with the help of MABS that was brought down to about €85,000. I then had to go to the credit union and negotiate a loan with them. Although I had less than €2,000 in shares they agreed to the loan, with conditions.

The credit union account was in my name only, so they wanted guarantors. My wife was 1 and my sister and her husband was the other. At the time I was earning good money and was able to make the re-payments of €275 per week.

Since then there has been a second baby born and sadly shortly after that my marriage failed. Soon after the recession hit and my business went into free-fall (I drive a taxi). I went back to the credit union and re-negotiated the loan re-payments to €204 per week. However, in the last year the taxi industry has suffered very badly and over the last winter there was times I couldn't even get to work. 

I did miss a few payments over the winter and rang the credit union to explain my situation. I also explained that the current re-payments were too high as I have maintenance payments and heavy solicitor and court fees to pay and offered to pay €120 per week. If there was a problem with this they were to get back to me within 2 weeks. 

I heard nothing for about 6 weeks and then got a very short e-mail requesting me to contact them. I rang the person back and again explained my situation and she did acknowledge my situation. She also acknowledged that i was a genuine payer and had made great efforts to clear the loan, to date about €20,000 has been cleared off the loan. However, due to the missed payments over the winter and the lower re-payments, I have fallen into arrears and she stated that if I didn't increase my re-payments they would involve the guarantors. I again stated that in the current economic climate that I didn't have anymore money to pay in. She said she would have to go back to the credit committee and see what they say.

I received a phone call a couple of days ago from the same person explaining that she had gone to the credit committee and they weren't happy about the €120 per week I was currently paying and wanted to meet me. I got the feeling that if I didn't increase the payments that they would involve my sister and her husband, even though I am making a genuine effort to pay them back. Even though money is very tight, when I go to meet them, I am prepared to make them an offer of an extra €20 - €30 per week. 

Can somebody please explain the rules on this to me?

Even though i'm making a genuine effort to pay them back, can they go after my sister and her husband and even my ex-wife as they are the guarantors?


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## PaddyBloggit (19 Mar 2011)

Simple answer ... yes ....  'cos they said they'd guarantee the loan.


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## merille (19 Mar 2011)

maybe u should explain the situation to your ex-wife, as u got these loans together (wedding loan anyway) and she would understand if u pay less maintainance. on the same time u can pay more loan back? just my option.


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## Daemon (19 Mar 2011)

Maybe i'm wrong in my understanding. I haven't defaulted on the loan and have made a genuine effort to pay as much as i can. I have also kept in touch with the credit union. Under those circumstances can they bypass me and go after the guarantors?

I would prefer to keep my ex-wife out of this if at all possible. The loan and other expenses are part of a court case coming up shortly.


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## PaddyBloggit (19 Mar 2011)

Only way you'll keep the ex out of it is to pay what you should be paying fully.

If they see that you are in difficulty they will hit the guarantors for the cash.

To be honest she should take part of the burden as she was a party to the loan first day.


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## donee (19 Mar 2011)

PaddyBloggit said:


> Simple answer ... yes .... 'cos they said they'd guarantee the loan.


 +1 you state that you went to MABs and they got your overall amount reduced. GO back to MABs and let them negotiate with the CU for you.
Also tell the CU that €120 IS all you can afford to pay for now and that your not in position to pay any more, God knows you've enough on your plate.
MABs should be able to do an up to date financial statement for you.
Though how the CU ever took on that amount of debt with such low shares is beyond me.(i was on the board of a CU for over 7 years myself).
Dont over stretch yourself with to high a repayment plan and remember its only money you owe not blood, ive seen to many depressed people over money in my time.
the CU's credit committee did'nt do its job properly and now are trying to correct it position by putting you under pressure
good luck


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## Daemon (19 Mar 2011)

thanks donee, you said you were on the board of a CU for over 7 years, maybe you can answer something for me?

can the CU legally bypass me and go after the guarantors even though i'm making a genuine effort to pay them and have kept in touch with them?

thanks for the help


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## ontour (19 Mar 2011)

It is difficult to quantify what a genuine effort to pay is, if you have about €80k outstanding and have a rate of about 8% then your offer of €120 per week would not cover the interest.  There is nothing about your situation that appears to be very short term which would be of concern to the credit union.  For the credit union they would not be looking after the best interests of all of their members if they did not pursue monies owed.

There is no doubt that you are not trying to walk away from your commitment but the guarantors were put in place in case you were unable to pay the loan and this situation has unfortunately happened.  The guarantors signed up to take responsibility in the current circumstances and they may need to meet that commitment.


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## Daemon (19 Mar 2011)

I have no intention of walking away from my responsibility in this matter. The initial loan was for about €85k, there is an outstanding balance of about €63k. At the time of taking out the loan i could afford the re-payments of €275 per week, however my circumstances have changed since, like so many other people out there. If I stretch myself I might be able to manage €140-€150 per week and if things get better I would pay more as I don't want this loan hanging over my head longer than necessary.

My question is, the fact that I have made genuine efforts and have kept the credit union informed of my circumstances at all times, can they legally bypass me and go after the guarantors and also is there a way to re-schedule the loan over a longer period of time at the lower rates so I can afford the re-payments and then as I said if times get better I would pay more in.


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## ontour (19 Mar 2011)

There would not appear to be any reason that the credit union could not go after the guarantors if you are not meeting the terms of the loan agreement but that depends on the terms of the guarantor agreement.  What exactly did they commit to?  Meet the repayments if you can't, cover arrears or take over loan if you default?

You would need the credit union to reschedule the loan over approximately 15 years depending on the interest rate.  What is your current rate?  This is the logical solution for you.  The challenges may be that the credit union is only allowed to have a small percentage of longer term loans.  Rescheduling the loan may form a new loan agreement so that would need the guarantors to sign up to a new agreement.


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## ddlo (27 Mar 2011)

Daemon I am sorry I can't be of specific use to you except to say that all credit unions are different and all have different rules, eg some report you to ICB, others don't, some will extend loans over longer periods, others won't.  I think they would be happier if you could pay the interest weekly, plus a little extra, even €10 extra per week off the capital.  Your post is heartbreaking, but please don't feel your story is unique, there are lots of us suffering.  Like Donee reminded you, its money you owe, not blood.  It sounds like you have been through rock bottom and please know that there is a way out, it will take time but you should get there.  You did mention that your original loans were 100k and MABS "got them down" to 85K. Does that mean you have a bad credit rating now as you defaulted on 15K worth of loans?  It might mean that the CU would be keeping a tighter rein on your account now, given the history?  I think a face to face meeting will be better than over the phone or in writing, as they may agree to something verbally rather than commit themselves in writing, they must hear cases like this all the time in this climate.  Let us know how you get on.


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## Bronte (28 Mar 2011)

The answer to your question is that yes they can go after the guarantors.  

When you were ordered to pay maintenance did the issue of the loans repayments you have to make not come up?  Why is your wife not responsible for the debt jointly incurred, as in why is she not making some payments?

In relation to the guarantors don't you think you should talk to your sister?  She needs to be informed of the possibility of the credit union coming after her.  If she has the money in savings she could pay back the loan and then you could pay her.  If she doesn't have the money can she afford the repayments.  Be proactive in discussing what is happening with your sister.  She may be sympathic and may have a solution, and even if she will be angry you owe it to her to tell her.


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## Crugers (28 Mar 2011)

Daemon said:


> Maybe i'm wrong in my understanding. I haven't defaulted on the loan and have made a genuine effort to pay as much as i can. I have also kept in touch with the credit union. Under those circumstances can they bypass me and go after the guarantors?
> 
> I would prefer to keep my ex-wife out of this if at all possible. The loan and other expenses are part of a court case coming up shortly.



The standard Credit Agreement in credit unions defines default as *any* missed payments so technically you appear to be in default. In cases where there is default the CU *could* call in the full loan from the member and/or the guarantor(s).

Here is the ILCU's recommended wording:
7. Events of Default
7.1 In the event of:
(a) any repayment of principal or payment of interest in
respect of the Loan not being made on the due date; or
(b) any breach by the Member(s) of the terms and conditions
of the Credit Agreement or of any other obligations of the
Member(s) to the Credit Union; or
(c) the death, bankruptcy or contractual incapacity of any
guarantor or if any guarantee should for any reason become
unenforceable or if notice of termination is received by the
Credit Union from any guarantor and insofar as any of the
aforementioned relate to the Loan or any guarantee held in
respect thereof
the Credit Union may, subject to and in accordance with the
provisions of the Credit Union Act 1997 (as amended) and the
Rules of the Credit Union, terminate the Credit Agreement and
call in the Loan together with interest.

The CU will be restricted when it comes to refinancing the loan. Since late last year they MUST make much larger "provisions for bad and doubtful debts" if they reschedule a loan.

If you can, get back to MABS. If you can't then you need to do what MABS would do - list your income(s) and expenditure, figure out just how much you can afford to pay and then approach the CU with your paperwork. Hopefully the CU can accommodate you without resorting to calling on the guarantors.

As others have suggested, it isn't the end of the world but it won't be easy by the sounds of things!

Good luck.
HTH


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