# CU loan 22k, now clutch gone in car and need €600. How difficult?



## Deleted 15555 (16 Apr 2012)

I know all CU are different but was wondering if anyone has any advice to give on this?

We have a loan with the CU at 22k at the moment 8k in savings never missed a payment (its a work CU). 

We did look in January to restructure the loan but were told if we did we would not get another one for 1-3 years (even though we have excellent payment history) so we told them we would keep on paying what we are paying and leave it be. 

The clutch is gone in the car and we were hoping to go there tomorrow to look for approx. EUR600. I am dreading it. Anyone have any experience of something like this ? How tight have they gone?

Thanks


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## Crugers (17 Apr 2012)

If your current loan was 'rescheduled' then, in accordance with Section 35 of the CU Act, there would be consequences and very little the CU can do about that! Section 35 does allow for small increases (<1000) in limited circumstances and for exceptional expenses only.

However in your case it is open to interpretation whether a change in your loan balance would mean the loan is being 'rescheduled' as defined by Section 35:
_"Rescheduled loans are those loans where the repayment conditions have been altered so that the duration of the loan is extended *and* the loan was in arrears at the time of reschedule, *or the loan would have* fallen into arrears if it had not been rescheduled because the terms of the original loan agreement would no longer be met."_

It appears that , in your case, arrears don't apply and therefore Section 35 shouldn't apply! There is a suggestion that they may if the clutch isn't sorted.

Best to talk to them - they want to grant loans especially to members like you who repay on time!


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## Deleted 15555 (17 Apr 2012)

Thanks a million for that. That Quote is very interesting. You are
Right with regard to the rescheduling they are treating Us like we are in arrears but we Have never gone into arrears or do we Want to. We can't really fall into arrears anyway as the money comes directly out of my husbands salary and it would mean changing the salary mandate accordingly, which we
Wouldn't do. Also the Payroll girl who he would have to get
Past is on the cc of the CU. !!!!

In any event we are not going to reachedle going forward We just want to reduce the balance ASAP, however, the clutch has set Us back as its gone and it pay day next week (we need it fixed immediately). So hopefully as you said they will treat us like the good Customers that we are. Unfortunately there is only one women there (it's a Work CU) and she isn't that pleasant to deal with and it feels
Like she is giving you the money out of her own purse. You know how it is when you are stuck that pit in your stomach ! And really they are the only ones we can turn to. 

Thanks


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## Bronte (17 Apr 2012)

Best of luck with the credit union on getting the extra money, don't worry if you don't get on with the lady that works there, I'm sure she will understand.

You might want to look into being allowed pay off some of the 8K savings against the loan, that will be earning very little while you are paying a lot on the 22K.  There is a procedure for this, and there are other threads on here about it.  Don't do this at the same time as you request the 600 Euro

Also you must think about having a rainy day fund so that when issues like this crop up that you have the money to deal with it.  Maybe you need to do out a budgeting spreedsheet.


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## Deleted 15555 (17 Apr 2012)

Thanks for that. I know .. I am budget sheet and excel sheeted up to my ears. I do it every month and actually have a running balance sheet going. I think our problem is to say NO when spending,  but in fairness we have four small kids (two with SN) and our life is fairly stressful. Saying all that we don't smoke, don't go to the pub, have one night out a month,  have a fairly old car etc My husband cycles to work from Feb - October  to save money (35km) each way. We just constantly seem to be hit by minor things. If the CU loan was gone we would be much better off. Its EUR700 per month so its nearly like a third mortgage. Its unfortunate this month the way it happened (a week before pay day) and we are heading for a week away next Wednesday (which was a big Birthday present from my Dad), so thats why we are so stretched this month. But you are totally right we do need a rainy day fund and it will be a priority going forward.

Thanks so much for all the advice. And hopefully the lady from Del monte will say yes today !


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## demoivre (17 Apr 2012)

SBW said:


> The clutch is gone in the car and we were hoping to go there tomorrow to look for approx. EUR600. I am dreading it. Anyone have any experience of something like this ? How tight have they gone?



You should be able to withdraw the €600 you need, and up to about €2500, from your savings in the CU and if you want you can offset the remainder of your shares against the loan. See here.


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## Deleted 15555 (17 Apr 2012)

Wow that would be great. I always thought it was 3  x has it changed. Is this statute still in place then as we tried to argue with them about the restructuring as we felt they were treating us like a bad debt when we are not. But they told us that there are alot of new rules in place from the regulator. In fact everything she tries to do she quotes the regulator on. I know they are under pressure from them  but it's a bit frustrating where we clearly have nothing but a excellent repayment record.


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## Crugers (17 Apr 2012)

demoivre said:


> You should be able to withdraw the €600 you need


Only with the specific approval of the Board of Directors...
If they reject an application for a top up loan of €600 I can't see them approving a withdrawal of savings.



demoivre said:


> ...and up to about €2500, from your savings in the CU


Again it would only be possible with specific Board approval. If you were having difficulty getting approval for a €600 loan I can't see approval being forthcoming.



demoivre said:


> and if you want  you can offset the remainder of your shares against the loan. See here.


This is a bit of a nuclear option. While it is possible your credit rating within the CU would most likely be seriously affected.



SBW said:


> Wow that would be great. I always thought it was 3  x  has it changed.


Each CU will have policies that set out interest rates, loan limits etc... So you would need to ask your particular CU.  


SBW said:


> Is this statute still in place then as we tried to  argue with them about the restructuring as we felt they were treating us  like a bad debt when we are not.


If you ask and get a loan restructured, even without any current or past arrears then Section 35 of CU Act imposes very strict controls and limits. There is very little the CU can do about that part of the Act!


SBW said:


> But they told us that there are alot  of new rules in place from the regulator. In fact everything she tries  to do she quotes the regulator on. I know they are under pressure from  them  but it's a bit frustrating where we clearly have nothing but a  excellent repayment record.


It is frustrating for you the member and for the CU. The Regulator applies the "one size fits all" and the CU must toe the line!

Your best option would to *negotiate *a top up of €600.00... You are only increasing the repayments schedule by a month or two at most!

If the Credit Committee rejects your application you can appeal the decision but negotiation is the way to go!!!


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## Deleted 15555 (17 Apr 2012)

Thanks all this information has been invaluable. Unfortunately there doesn't seem to be anyone there today so I will have to wait another 24 hours. I did find this quote in the annual report. Does this mean 25K on top of shares can be borrowed?

The authorisation limit of the loans officer, is €25,000 above shares to be repaid over 5 years (subject to Credit Committee guidelines).

Thanks


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## demoivre (17 Apr 2012)

Crugers said:


> Only with the specific *approval of the Board of Directors...*
> If they reject an application for a top up loan of €600 I can't see them approving a withdrawal of savings.
> 
> 
> Again it would only be possible with specific Board approval. If you were having difficulty getting approval for a €600 loan I can't see approval being forthcoming.



A majority of the board. I would be doing it the other way around - looking for some of my savings first before looking for a top up. The OP's loan is performing on schedule so repayment capacity is there, and there would still be substantial security there from the CU's point of view if the OP was allowed a partial withdrawal of savings.



> Your best option would to *negotiate *a top up of €600.00... You are only increasing the repayments schedule by a month or two at most!


I disagree that the best option is to borrow more money at 9 or 10 % when you already have savings earning probably 1%.


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## AlbacoreA (17 Apr 2012)

I don't see where Section 35 of CU Act applies to any of this. 



SBW said:


> ...We did look in January to restructure the loan but were told if we did we would not get another one for 1-3 years ...



I've never heard of that before. I would assume its the ratio of loan to saving that was the issue not act of restructuring. I mean if you were to pay off half your loan you'd think you'd be able to restructure to lower payments on the rest of the loan without limitations. Increasing the loan on the same repayment would effect the ratio negatively. I would imagine they'd have limits on that though.


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## Deleted 15555 (17 Apr 2012)

I know we were shocked too. I have a friend who is an auditor and she looked up all of section 35 for us and she came up with this.


Having received advice on the matter it appears to us that Staff members in the Credit union appears to be unsure of the request and procedures for a loan restructuring to facility cash-flow (and thus ensure that loan repayments continues to be made on time) v's a loan restructure for arrears and reintegration of bad debt.

Credit union guidance roles in credit and credit control for credit unions Oct 2007 - chapter 8 page 12 does differentiate between loan restructuring to facilitate re-scheduling v: bad debt.
Loan restructing is any change to the original terms and reques a new credit agreement and credit approval of credit union board. Credit union to also keep records of rescheduled loans.
Only where a loan is re-scheduled for "arrears" purposes does a credit union have to create a provision (we seem to think this is where the loan officer may be confused - as she has stated should the loan be re-scheduled then the member cannot apply for a loan again for another five years).
Central Bank consumer protection code 2012 (jan 2012) Chapter 8 page. 52

Outlines the procedures for arrears handling 

Page 54: Revised repayment arrangements where a loan is rescheduled for arrears and bad debt reasons, then a repayment plan is issues to the consumer and the Irish Credit bureau notified accordingly.

Clearly this is not the case being presented:

1. A considerate element of the loan capital element has been repaid. Borrowed approx. 35k, 11k been repaid, Balance 24,000 = 34% of capital borrowed paid off
2. there is no history of late payments so a good clear repayment history has been established
3. the loan is not in arrears currently, nor is there the intention of it going into arrears, therefore the loan reschedule request should not be classed or considered an arrears so bad debt reschedule
4. what is being requested is a restructuring of the remaining term of the loan i.e. 66% in line with the changed income circumstances to bring the amounts in line with current cash-flow so that the remaining loan amount capital + interest can be made in full. 


But my husband spoke to another board member of the CU (a colleague) and he assured him it was the case. So we decided to leave it rather than risk being in a situation like we are today and not being able to get a loan from them.

Does anyone know what the above quote means which I found on their Annual report.

"The authorisation limit of the loans officer, is €25,000 above shares to be repaid over 5 years (subject to Credit Committee guidelines)."

Thanks


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## Crugers (18 Apr 2012)

SBW said:


> ...looked up all of section 35 for us and ... came up with this...


Snap!


Crugers said:


> _...It appears that , in your case, arrears don't apply and therefore Section 35 shouldn't apply!..._



That said I think the Regulator would 'strongly' recommend that if the terms are altered on any current loan, it should be reported on as a rescheduled loan AND therefore (bad debt)provision must be made as per Section 35! I suspect that the CU is concentrating more on trying to avoid the situation where they have to make the provision (€4,800) as opposed to facilitating you getting the €600 you need!



SBW said:


> Does anyone know what the above quote means which I found on their Annual report.
> 
> "The authorisation limit of the loans officer, is €25,000 above shares  to be repaid over 5 years (subject to Credit Committee guidelines)."



That means that it is possible for the CU loan officer acting alone to approve loan applications within the value limit = [Shares+€25k] subject to Credit Committee guidelines.



SBW said:


> Like she is giving you the money out of her own purse.


If she is a member of the CU than that is exactly what she is doing! The funds in the CU are the members savings!!!
I wouldn't support, encourage or condone bad practice on her behalf. However I think if more of the loan officers, managers, credit committees and boards had viewed the past loan applications as "coming from their own purse" a number of CU's wouldn't be in the sad state they are in now!

Going back to your original post and the suggested solutions:
Withdrawing Shares will have negative connotations within the CU. 'Restructuring' / refinancing will also have negative connotations within the CU and probably more than possibly will require bad debt provision be made by the CU - extremely negative connotations.

Making an application for a second loan, or a top up of the existing loan, of €600 is what the CU is supposed to be there for! It should be why they exist! Sometimes it can be hard to see the wood for the trees!


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## Deleted 15555 (18 Apr 2012)

Ok thanks for that Crugers. That makes it all very clear. One final question. If she is allowed approve 25k + shares. Is this not then a total of 33k in our case that we can borrow ? Or given the new section 35 rules does that mean we have to clear the balance on the existing loan before being allowed to get that again. ? 

Thanks so much for all the help. Makes me understand the workings of a cu a whole lots better.


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## Bronte (18 Apr 2012)

Crugers said:


> Making an application for a second loan, or a top up of the existing loan, of €600 is what the CU is supposed to be there for! It should be why they exist! Sometimes it can be hard to see the wood for the trees!


 
Wait a second. The credit union is there for all it's members and to do it's job correctly it has to access risk.  OP is struggling and maybe an extra loan of 600Euro will trigger the beginning of a default.  Yes it's easy to say for sure she needs to get the clutch done, absolutely, but why has she landed in this situation.  SBW this is not an attack on you.  But the credit union cannot just give out loans because a person wants one, that's why so many credit unions are in trouble.  You must work with your credit union to come to the best solution.  Borrowing more money is not necessarily the solution, maybe you could get it from a family member instead.  What is going to happen next month if you have to pay for something else that is unexpected.  That could tip you over the edge and not be able to pay the credit union.  Maybe you need to do the money makeover thread to see how you can make savings and budget better.  As part of that it would be interesting to know what the 22K you borrowed was for.


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## Deleted 15555 (18 Apr 2012)

The only reason things are extremely tight this month is that we are going on holidays next Wednesday and are stretched to the limit. As I said the flights were a birthday gift from my Father but obviously I need some money to pay deposits on house etc. That is the only reason why we are so stretched and we have dug into our rainy day fund to pay for the house etc and haven't manage to replenish it yet. The clutch was a total unforeseen expense. The original 22k was for the car and an extension (we have two sons with special needs and absolutely had to do it). I know it wasn't a personal attack on me - thanks for the input. But as I said we have never ever gone into arrears the reason we are struggling is because the repayments are 700 a month and we are a middle income family and we are down well over 1k in the last two years since originally the loan was made but with cut backs and tight budget management (which we are presently doing -  we can afford it) and always paid on time and the last time we got a top off was this time last year of EUR500.
Thanks


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## Crugers (18 Apr 2012)

SBW said:


> If she is allowed approve 25k + shares. Is this not then a total of 33k in our case that we can borrow ?



If - better make that a little bigger - if - you applied for a loan of [shares+€25k] it would be possible for her to pass that loan without referring the application to the Credit Committee...

That is not the same as saying you can get a loan of €33k! To get the loan you must pass the criteria set out in that CU's policy document.

So the statement is really just defining a part of the CU policy -  that the loan officer is authorised to pass loans up to a certain value limit.

The statement is qualified with "_...subject to Credit Committee guidelines..._". These guidelines/policy could be almost anything but should not be a secret... Ask and you shall probably receive a copy.


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## Bronte (18 Apr 2012)

Not trying to be cruel, particular as you have special needs children, but from the credit union's point of view they might think a clutch was more important than a holiday, indeed from your point of view the clutch is the most important thing as you cannot survive without a car. You're already stretched to the limit, you had to have a top up last year and now going on a holiday. That's what the credit union is for to make decisions so that you don't go into arrears by making the decision not to loan you more. Your dad, who is being kind might have been better off giving you the money for the car instead of flights.


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## Deleted 15555 (18 Apr 2012)

Thanks Crugers that makes perfect sense.
I know Bronte totally agree with you but the flights have been bought and paid for so it would be a waste now not to go. And no one can know if the clutch in a car is going to go its just one of these things ... that are challenging to say the least ! I know you are not trying to be cruel I appreciate that. But I really thought thats what the CU was for helping out members and then saving together also. A two way situation. I have not abused the system from that perspective.


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## Crugers (18 Apr 2012)

Bronte said:


> ...to do it's job correctly it has to access risk


Yes I thought I'd strongly inferred that where I said


Crugers said:


> ._..I think if more of the loan officers,  managers, credit committees and boards had viewed the past loan  applications as "coming from their own purse" a number of CU's wouldn't  be in the sad state they are in now!..._





Bronte said:


> ...Borrowing more money is not necessarily the solution, maybe you could get it from a family member instead...


Eh If we leave out the borrow we're only left with 'beg or steal'... Do you have a recommendation?
But seriously the OP had said


SBW said:


> ...they are the only ones we can turn to...



From my reading of it the OP is not "struggling" she is coping. Yes things are tight and yes there can sometimes be scope for some 'savings' so the money makeover section might be useful.
However the original question was how to deal/cope with approaching the CU for €600. That's what I was addressing.

Declaration of interest?
I'm a CU Board Member.


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## Deleted 15555 (18 Apr 2012)

Thanks Crugers. Hope you are on the board of my CU !


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## Bronte (18 Apr 2012)

Crugers said:


> Eh If we leave out the borrow we're only left with 'beg or steal'... Do you have a recommendation?
> .


 

Not sure what your point is Crugers but there are other options than beg or steal or the credit union.  There is borrow from family member and save for emergencies.  OP has stated that their rainy day fund is being used for a holiday.  The danger is OP will go on holiday, maybe overspend on that on a credit card, come back having that bill, and now also owe 600 Euro extra and next thing you know will not be able to pay a utility bill or the credit union. What's going to happen if anything else breaks down, rainy day fund is gone.


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## Deleted 15555 (18 Apr 2012)

Thank goodness I don't have a credit card. Got rid of that as part of our cost saving ! so we only have what we have saved which we will need for the first day or two and then DH gets paid and we will have enough on that for the rest of the holiday.In fairness when we get there we won't be doing much (with 4 smallies under 9 and two with Special needs - one on the higher end of the scale). It will just be the beach and the pool. I have told the kids they can have one ice cream and one drink every day thats the limit. There is no way we can't pay the CU its direct from DH salary and he would have to go and change the mandate and give it to the payroll girl who is on the credit committee so its just not even an option, even though we wouldn't do it. We want the loan reduced ASAP that way it will give us EUR700 a month extra making us a lot more comfortable. In addition to this we have the respite grant (EUR1700) coming in beginning of June and considering we have taken our respite already this will be used to plough back into the rainy day fund.


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## Crugers (18 Apr 2012)

Bronte said:


> *Borrowing more money* is not necessarily the solution





Bronte said:


> ..,  *There is  borrow* from family member...


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## Slim (18 Apr 2012)

SBW said:


> Thank goodness I don't have a credit card. Got rid of that as part of our cost saving ! so we only have what we have saved which we will need for the first day or two and then DH gets paid and we will have enough on that for the rest of the holiday.In fairness when we get there we won't be doing much (with 4 smallies under 9 and two with Special needs - one on the higher end of the scale). It will just be the beach and the pool. I have told the kids they can have one ice cream and one drink every day thats the limit. There is no way we can't pay the CU its direct from DH salary and he would have to go and change the mandate and give it to the payroll girl who is on the credit committee so its just not even an option, even though we wouldn't do it. We want the loan reduced ASAP that way it will give us EUR700 a month extra making us a lot more comfortable. In addition to this we have the respite grant (EUR1700) coming in beginning of June and considering we have taken our respite already this will be used to plough back into the rainy day fund.


 
Firstly, I think it is awful the amount of stress this (relatively) small expense is causing you. Secondly, all credit unions are bound by the same rules, as pointed out, and are subject to closer scrutiny than ever from the ILCU and the regulator. That said, you would probably be dream members for most credit unions.

This thread here http://www.askaboutmoney.com/showthread.php?t=155464 sets out the rules on reducing your savings to no less than 25% of your loan balance. It is, however, a Board matter and will usually have to be considered by the Board at its next meeting. Alternatively, you should be able to top up your existing loan by the €600 without too much difficulty. From what you have said, the CU staff may have the authority to do this for you without Board approval. This would be the fastest way but you may have to press the staff member to do this quickly.

On a boroader issue, I feel there may be a conflict of interest that a payroll staff member is also on the Board of your CU, creating discomfort for members, if that is happening. It is your credit union and it should be doing its best to facilitate you, the member.

Good luck with this and the holidays. I have no doubt you deserve the break. Slim


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## Deleted 15555 (18 Apr 2012)

I posted earlier but for some reason it didn't post. 

Well Thankfully the lady from Del Monte said Yes. Apparently she didn't even look up from her desk.. so I was obviously worrying about nothing. 

You have all made some very valid points and we all so genuine, thank you so much.

It would be intereting to know going forward where we stand with them again if we are ever stuck ..but here's hoping we won't be, But its nice to know we have a fall back. The account is in my DH name so he deals with it but we do everything together banking wise and he says this women is just not very pleasant at all to deal with on top of her giving us the feeling that she is parting with her own money.

Thanks again so much, now I am so so looking forward to our holiday


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