# Is it ok for a credit union to pass on a restructured loan to a debt collection agency?



## learning curve (8 Mar 2016)

Hi!
Some years ago I had an 18k loan with my local credit union that I couldn't repay. I missed some payments and approached them with the truth of my situation. That I couldn't make the repayments that they required, and asked if we could restructure the loan. They agreed that I could pay 50 euro per month, and although this doesn't sound like much, it was to me, because I was in dire financial trouble, and dealing with several lending institutions (all my own fault!).

I have never reneged on this payment plan, and have never missed a payment.

However, this week I received a letter from a company who identified themselves as a 'debt collection company', and they had been charged with collecting the outstanding debt for the Credit Union.

I rang the company, and told them that my debt had been restructured and that I had never missed a payment, he agreed and said that it would be fine for me to just redirect my payments to them. I told him i wouldn't, because I didn't owe him anything, and that I would continue to pay the Credit Union.

I then rang the credit union and the girl said that they were short staffed at the credit union, and had passed on 'bad debts' to the collection agency. She told me not to worry when I said I hadn't got the whole sum to pay back. I told her that I didn't feel that my debt was a bad debt, I told her it had been restructured and I felt that they had no right to pass my details to a debt collection agency when the debt was being repaid.

I asked her to get their finance manager to call me to discuss this, after 6 days, I called again today (three times), got an answer machine each time, and after leaving three messages requesting a call back, a girl rang to say that the finance manager would call me tomorrow.

Does anyone know if restructured loans can be just passed on like that?


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## newirishman (8 Mar 2016)

How much is left on the loan?

Debt can be sold on generally speaking, as long as the terms&conditions allow for it, and as long as the contractual details are not changing.


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## learning curve (8 Mar 2016)

Thanks for your reply Newirishman.

Its down to 9,800 euro now. I thought that credit unions couldn't do that! Obviously, I definitely want to pay this money back, because it belongs to the members, and if I had it I would definitely up my payments. However, I can only do my best. A couple of years ago I won 1,500 in a christmas draw and paid all of it from the loan. So my argument isnt about the loan, but that they have outsourced it. I know the debt is my fault, but I hate the feeling of being so disposable.


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## Palerider (8 Mar 2016)

I don't understand why the CU would incur further costs by outsourcing if the restructured loan was performing to the new agreement, were all payments met on time.


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## learning curve (8 Mar 2016)

Hi Palerider,
Yes, I have always used a direct debit for this purpose, and it goes out every month.


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## Gerry Canning (9 Mar 2016)

learning curve.
...............
The Cu,s were put under huge pressure to (sort) slow or non-paying loans.
From a Cu perspective it might be less costly to let a Debt agency continue to collect, rather than use resources to chase up even on rescheduled type loans.

On the plus side, write and  ask Cu that since loan is now with debt agency, has interest been stopped , if so it means any funds you pay are coming off the 9800 without extra interest..

So might even end up in your benefit ?


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## learning curve (9 Mar 2016)

Hi Gerry, thanks for your post.

I understand what you are saying, however, I don't think receiving payment re direct debit from me could be any more expensive than hiring a debt collection agency.

The finance manager called me back and said that they hadn't sold my debt, but that the debt collection agency were managing the 'backend' of their office. She said that the loan had been 'charged off'.

My question is (now) if they employed a debt collection company to manage their affairs, is this not a data breach?
I asked her if they were not obliged to send me a statement of my account each year, and she told me that I didn't have an account with them, because I offset my shares against the loan. 
I told her that I felt really uncomfortable dealing with a debt collection agency, and would prefer just to deal with my CU as always. She said that if I didn't want to deal with Cabot Finances I should clear the loan. If I could clear the loan, I would not have been having that conversation with her. I know that the debt is my fault. I just want to pay it back as best I can, without worrying about being hounded by a debt collection agency. I have researched them and they have a lovely website, but reviews are showing them to be bullies


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## Slim (9 Mar 2016)

Hi learning curve.
I think the cu may have the legal right to refer your loan to a collection agency but l think it was sloppy and insensitive in your case, as you are paying per agreement. It seems that your CU is in some disarray when they need to get a debt collection agency to manage their 'backend'.

I suggest a polite but firm letter to their Complaints Officer, followed by a letter to the board if unsatisfactory, requesting that the CU retain management of your loan as you are paying the agreed amount. Even though you set off your shares, l would have expected them to leave a tenner in your account to keep you a member.

Whatever you do, don't fret and keep paying to CU as per agreement. It doesn't sound like Cabot has any interest in hounding you. Good luck.


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## learning curve (9 Mar 2016)

Thanks Slim for your reply.

I guess I just feel insignificant to them. I know that sounds stupid. I am not even a member anymore. I was initially with a small country credit union, then moved it when I moved to the city. The old credit union dealt differently with members.

I will definately keep paying, I haven't a notion of stopping the repayments. The finances manager was really rude to me, and wouldn't allow me to speak. I asked if our conversation was being recorded and she said she didn't think so, which explained a lot.

I guess I just need to find out if the CU should have contacted me first before going to the collection agency. They just assumed I couldn't pay ( correct assumption in fairness), but surely I am entitled to some degree of communication before decisions like that are made.


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## Waver (9 Mar 2016)

Restructures are usually temporary and subject to review. It takes resources to review every restructured loan every 6 or 12 months to check if the circumstances have changed and if the debtor can afford to make a higher payment.


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## learning curve (9 Mar 2016)

Thanks Waver.
In 4 years they have never contacted me. So surely limited resources have been used other than to outsource my charged off debt.

My question is, do t they have to notify you or communicate with you in some way?


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## Waver (9 Mar 2016)

The Data Protection Commissioner seems to think that passing a debtors information to a debt collection agency is not a problem

[broken link removed]


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## Just wondering (1 Feb 2017)

Hi there, 

Just wondering do you know if you have gone to court, the credit union brought a case against me over a loan. The judge stated I could not pay after appearing three times showing your statement of means, can they look for that money again? They have had a debt collection agency trawling my facebook account as they did not have my current address. I don't understand, though, as the judge stated I could not pay and wrote off the debt. This all occurred over four years ago. They then sent me a letter with interest & outstanding loan but how if the judge stated they should write it off?

I'd be very grateful for any advice please & thanks.


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