# Credit Union Loan Agreement Terms



## Tom2458 (18 Jan 2016)

I took out an interest only loan from a credit union some time back. It was only intended that the capital be repaid when I was in funds from the proceeds sale of a property. The recession came along, the sale of the property never happened and the property is now in negivate equity. 

I had managed to continue paying the interest on the loan for some time, but unfortunately was not in a position to maintain this. The credit union have now served me with a civil bill for the amount outstanding. My question is this.

If I submit a defence in court, I think I can show that the credit union acted outside the  regulations laid down by the financial regulator. Will demonstrating this be of any benefit to me in court?

They never gave any consideration or assessed to my ability to repay the capital and interest on the loan. 

They have not replied to my numerous letters in relation to the account.

My wife signed guarantor to this loan, but yet she has not been included in the civil bill.

They kept piling on interest to the loan after I had notified them in writing that I was in financial difficulty. 

They transferred funds from my shares account into my loan account without my signature. 

I have recently lost my family home. I have other debts that are way larger than the credit union loan. 

Any help would be appreciated.


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## thedaddyman (18 Jan 2016)

So in effect it sounds like you got an interest only bridging loan from the Credit Union.

I'm not clear when you say they never assessed your ability to repay, surely that was based on you stating that the loan would be repaid once the property was sold and by you asserting at the time that the capital from that sale would both cover the loan and would be used to pay back the loan

In relation to the transfer of funds, banks do have a legal right of combination or set off. In principle, they can do what they did. Whether or not in this the CU has the right to do so would depend on the exact circumstances and the types of accounts involved.


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## Brendan Burgess (18 Jan 2016)

Tom2458 said:


> They never gave any consideration or assessed to my ability to repay the capital and interest on the loan.



I would say that they gave roughly the same amount of consideration as you gave to it. 



Tom2458 said:


> They have not replied to my numerous letters in relation to the account.



And what are you saying in these letters?  You have an interest only loan. There isn't very much to be said.



Tom2458 said:


> They kept piling on interest to the loan after I had notified them in writing that I was in financial difficulty.



Surely they know the Irish law? Once someone notifies them that they are in financial difficulty, the Credit Union must stop charging interest and convert the loan into an interest-free loan.

Brendan


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## Gerry Canning (18 Jan 2016)

Brendan ,

Are you sure about {must stop charging interest} etc?


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## Tom2458 (18 Jan 2016)

Brendan Burgess said:


> I would say that they gave roughly the same amount of consideration as you gave to it.
> 
> 
> 
> ...


Brendan, 

I'm sure they did give it the same consideration that I did, which wasn't as much as I should have, but I'm not governed by the Financial Regulator. Is a financial institution not obliged to assess my ability to repay both the capital and interest. In this case it was a bridging loan as was pointed out in a post above, and no consideration was given to "What happens if you don't sell the building" 

I explained in the correspondence that I was in difficulty. I even asked that the interest not be applied to the capital. 

Are you sure it is the law that the interest should be stopped? Can you give me somewhere to reference this?


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## Slim (19 Jan 2016)

This brings to mind a story about Seve Ballesteros, the famous Spanish golfer, who, while playing a round of golf with a new caddy, asked the caddy's opinion on an approach shot "5 iron" replied the caddy confidently. Seve hit the 5 iron and the ball shot over the green. "I'm really sorry, Seve" the caddy apologised. "No, it's not your fault, it's my fault" replied Seve to the caddy's immense surprise and relief. "I trusted you!"

The credit union trusted you to repay the loan out of the proceeds of the sale of property. This did not happen and now you are trying to weasel out of the loan because they shouldn't have given it to you? If they had refused the loan, no doubt you would have been on here complaining about the rigidity and shortsightedness of the credit union.

Yes, they are entitled to set off your shares against your unpaid loan. If the loan is unpaid for 53 weeks, it is "written off" and interest stops accruing. The credit union should have written to your wife and frozen any shares she has with them also. The credit union could have decided to freeze the interest at any time after they realised you were in difficulty. Would that have made any difference to your ability to now discharge the loan? The interest is not compounded on arrears.

Sorry if I sound harsh, I'm sure you have a lot on your plate with other debts and losing the family home.


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## 44brendan (19 Jan 2016)

Gerry Canning said:


> Are you sure about {must stop charging interest} etc?


I think the sarcasm passed over your head Gerry


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## Gerry Canning (19 Jan 2016)

44brendan said:


> I think the sarcasm passed over your head Gerry



It did ,because from some posters they seem to believe debts suddenly stop etc.
Maybe this poster genuinely thinks debts go up in smoke.?
Tom, Can I suggest meet credit union and set your mind to sorting this as best you can.Credit unions (of all the lenders) are the ones who work to sort.


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## Tom2458 (19 Jan 2016)

Disappointed by the number of smart This post will be deleted if not edited to remove bad language remarks I have received. They didn't help at all except to upset me more than I was before I came in here. 

Thank you to the people that actually answered some of the questions I raised in my original post without judging me or making a joke of my situation. 

I was a member of this credit union for twenty years and borrowed and repaid every penny, until I got into difficulty. It's not a question of NOT repaying this loan, its a question of CAN'T. 

If it comes to any of you, when you're faced with losing your family home, and your family, you might too try and "weasel your way out of the loan"


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## Guby (19 Jan 2016)

Tom,  irresponsible lending is unfortunately not recognised in the courts. Have you considered a personal insolvency option such as Debt Settlement or Bankruptcy?  Have you considered contacting MABS for advice?


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## thedaddyman (20 Jan 2016)

How can you say they never gave any consideration of your ability to repay capital and interest. To me, it's quite possible they did on the basis that there was actually a plan for repayment once the property was sold. The fact that the plan didn't work out doesn't mean they didn't consider your ability as you first post suggests that when you took out the loan, you had the ability to repay it.  You are not the first bad debt a CU has had due to changes in circumstances. 

Having said that, it was perhaps a more risky loan for the CU to give but back in the boom time, some CU's seemed to have notions and  think they were proper banks

Did they take a lien or security over the property in question or is it an unsecured loan. ?

Is selling the property now an option and doing a deal with the CU to write off the remaining debt.?


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## Tom2458 (20 Jan 2016)

thedaddyman said:


> How can you say they never gave any consideration of your ability to repay capital and interest. To me, it's quite possible they did on the basis that there was actually a plan for repayment once the property was sold. The fact that the plan didn't work out doesn't mean they didn't consider your ability as you first post suggests that when you took out the loan, you had the ability to repay it.  You are not the first bad debt a CU has had due to changes in circumstances.
> 
> Having said that, it was perhaps a more risky loan for the CU to give but back in the boom time, some CU's seemed to have notions and  think they were proper banks
> 
> ...



What I meant about consideration, was the fact that they did not take into consideration my ability to repay the loan if the sale of the property didn't happen. I know I didn't account for this either. But without the sale of the property, I would never have had or probably never will have the ability to repay that capital and interest. 

They just have an undertaking from my solicitor with regard to the security issue. But as I said, the property is now in serious negative equity and I am in the process of getting that sorted with another lender. They will hopefully agree to a short sale, but that will leave nothing to got to the CU unfortunately.


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## Tom2458 (20 Jan 2016)

Guby said:


> Tom,  irresponsible lending is unfortunately not recognised in the courts. Have you considered a personal insolvency option such as Debt Settlement or Bankruptcy?  Have you considered contacting MABS for advice?



I have considered both, with bankruptcy being the most attractive as some lenders don't seem to be too interested in Debt Settlement arrangements. (I have spoken to a PIP) But I'm self employed, so bankruptcy isn't that easy in terms of what assets (10,000 max I believe, including household, car, work equipment etc) I can hold on to.


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## CU Manager (1 Feb 2016)

Tom2458 said:


> I have considered both, with bankruptcy being the most attractive as some lenders don't seem to be too interested in Debt Settlement arrangements. (I have spoken to a PIP) But I'm self employed, so bankruptcy isn't that easy in terms of what assets (10,000 max I believe, including household, car, work equipment etc) I can hold on to.


Ahh, now your making sense, you want the loans to go away but you hold onto your assets ....have your cake and eat it ....you are moving into the realm of Freemen of the Land and related loonies .... they might even do you a good deal on some magic beans!


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## Buddyboy (1 Feb 2016)

Hi Tom, and I'm sorry for your situation. Losing you home is bad enough, but your family as well (as per your post), is something I would find hard to bear.
It does sound like you are in the process of getting it sorted, so well done on that. Also as you said, if you don't have the money, then you don't have the money.  You are not the only one, by a long shot, to have been hit by the property downturn. And like others, your assets dropped in value while your liabilities didn't.

The reason I'm posting this is by way of explanation of some of the replies you are getting, which may appear harsh.  Having been on here for a few years, and seeing some posters trying to blame everybody but themselves for bad situations, and trying any way to get out of it (and leave others on the hook), I can see you your original post might have (unintentionally) been a red rag to a bull for some who give good financial advice here.  "They (the banks/CU) did/didn't do this", "They shouldn't have given me the money" "It's all the banks fault" etc. are all such sentiments. The good bourgers of Ask About Money have seen it all before, and maybe are a bit jaded.

The suggestion of personal insolvency and bankruptcy are good ones, and you are considering bankruptcy.  If you had opened your thread with that, you would have gotten a different reaction.   I find that the advice here is very good for those who are trying to work through their problems, which you appear to be doing. It's just that that fact might have been obvious in the initial post.

Regards,
Buddyboy


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## Gerry Canning (1 Feb 2016)

CU Manager,
Your comments are not helpful and using CU Manager to make such sarcastic comments gives a poor CU impression.
You come across like a (banker) not a CU Manager.
Tom 2458 may indeed be a scrounging twit ,
If he is then to hell with him !

If not,
He is in a poor position and obviously not well versed in Finance.
I do not see him holding his work tools etc up to k10 as (having his cake)or moving into Freeman territory.

If he ain,t got funds/resources to pay and he is being honest with AAM ,then why harangue him ?
Anyone of us can end up in Financial Purgatory.


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## CU Manager (1 Feb 2016)

Gerry Canning said:


> CU Manager,
> Your comments are not helpful and using CU Manager to make such sarcastic comments gives a poor CU impression.
> You come across like a (banker) not a CU Manager.
> Tom 2458 may indeed be a scrounging twit ,
> ...


Did you read his posts? Clearly not .... He has already investigated the insolvency route and clearly doesn't like the downside of getting his slate wiped clean i.e. losing his assets (he wants to hold onto a lot more than €10K of assets it seems). He came on here, already armed with his insolvency options, essentially looking for advice on having a case for reckless lending on the part of the credit union being an excuse for wiping out the debt....that has more than a passing whiff of Freeman about it ...or having his cake and eating it


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## Gerry Canning (2 Feb 2016)

I can only go on what he said , I can,t presume more than k10.

As I said, if he is a leg lifter , my sympathy for him goes !
If he,s trying to keep a way of making future wage ,he has my sympathy.

I also agree there is a bit of a (whiff) here, but again ,it could just be he is financially banjaxed and is trying to regain a livelihood.
I also fully agree that there are too many people looking for get of free cards !


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