# Will CU let me offset Shares against my loan



## tk23 (18 Jul 2012)

I have 2 loans with my CU

Loan 1 - 2,296.27 
Repayment 97.00 fortnightly

Loan 2 - 7,326.89
Repayment 180.00 fortnightly

Shares - 2,030.67

If i were to request the shares to be offset against Loan 1 then i would have approx €200 per month back in hand. Need this as i am struggling to make things balance every month. Will CU go for this?

THanks for your help in advance!


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## demoivre (18 Jul 2012)

You can offset your shares against your loan under Section 32(5) of the Credit Union Act.


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## ontour (18 Jul 2012)

This constantly confuses me as the way I read the act is that the member can only decide to offset or withdraw if the shares after the transaction are not less than 25% of the liability  In this case the OP is already below 25% so has no scope to demand the offset.

Based on indebtedness the credit union can make the decision based on a lower ratio, so the OP can certainly request the offset based on financial circumstances but has no automatic right.

What am I missing?


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## demoivre (18 Jul 2012)

If you want to *withdraw* funds from the CU while you have a loan the 25% rule applies. However it does not apply if you wish to *offset* shares against a loan ie you can offset all your shares against a loan.


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## tk23 (30 Jul 2012)

Thanks for the replies, after a bit of tooing and froing, the CU have eventually let me offset my shares against the smaller loan, thus almost clearing this entirely. 
They did give me an initial reply of 
"
The value of your loans at the moment is €9,369.28 and shares is €2,342.32. The rules state that you must keep 25%of the value of the loans in shares . 25% of the loans is €2,342.32 – so it will not be possible to do this transfer"

I argued against this by quoting Section 32(5) which was recommended above. They eventually agreed, so thanks for all the help


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## Crugers (31 Jul 2012)

I have to disagree (not a lot!) with the words written by both ontour and demoivre above.



demoivre said:


> _You can offset your shares against your loan under Section 32(5) of the Credit Union Act._



In demoivre's case we are talking about "offset" - the funds are NOT leaving the CU i.e. there is NO CHANGE in the overall/net indebtedness.

The quote, relevant to demoivre's statement, from the CU Act is:
"_Where a member of a credit union is indebted to the credit union and  consents in writing to the credit union acting under this subsection,  the credit union may..._"

So it MUST be the CU acting to offset and then the Member can consent (in writing)!

In both cases, withdrawal and offset, the CU can refuse to act!!! IMO they wouldn't be acting in the Members best interests and in some cases would definitely be putting the CU's interests before the interests of the Member - which is hard as the Member is part of the CU...

So demoivre's statement should read - *The CU* can offset your shares against your loan under Section 32(5) of the Credit Union Act...

Of course that doesn't exclude the Member from making representations to  the CU and prodding/poking/kicking them into action...

What you need to do is ask them to start the process. Don't take "_they  can't_" for an answer - *THEY CAN!*
But it is possible that they WON'T!!!
That's an argument for another day!

Well done tk23 for succeeding in  your quest and well done your CU who have acted in your best interest!



ontour said:


> _This constantly confuses me as the way I read the  act is that *the member can only decide* to offset or withdraw if the  shares after the transaction are not less than 25% of the liability  In  this case the OP is already below 25% so has no scope to demand the  offset.
> Based on indebtedness the credit union can make the decision based on a  lower ratio, so the OP can certainly request the offset based on  financial circumstances but has no automatic right.
> What am I missing?_



The quote, relevant to ontour's statement, from the CU Act is: 

_"(3) *If a member of a credit union seeks* to *withdraw* a share in or deposit with the credit union at a time when he has an outstanding liability (including a contingent liability) to the credit union, whether as borrower, guarantor or otherwise, that *withdrawal shall not be permitted unless*—
(a) were the withdrawal to be permitted, the value of the member's savings immediately after the withdrawal would be not less than the amount of his outstanding liability; or
(b) *the withdrawal is approved*, in accordance with the registered rules, *by a majority of the members of the board of directors* voting at a meeting of the board;
*but no approval may be given* under paragraph (b) *if*, were the withdrawal to be approved, *the value of the member's savings* immediately after the withdrawal *would be less than 25 per cent. of his outstanding liability*."
_
In ontour's case we *are* talking about a change in indebtedness! The exposure of the CU goes up and the net indebtedness of the Member goes up!!!

*Requests* for withdrawals can be made by the Member. However they must be approved by the (majority of) Board and can only be approved within certain boundaries/limits - 25% etc...
The only thing that the Member can *decide* is to request the withdrawal or an offset!!!


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## Ireland.1 (26 Sep 2012)

I have quoted section 32 to the CU but they simply wont offset the shares against the loan.  What are my next moves?


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## Slim (1 Oct 2012)

Ireland.1 said:


> I have quoted section 32 to the CU but they simply wont offset the shares against the loan. What are my next moves?


 
You could appeal again to the Board of the CU. Alternatively, arrange a meeting with the Cu manager and explain your difficulty. Inform him/her that you are going to arrange an appointment with MABS and will have to suspend payment in the interim. I suspect that the CU will take a more sympathetic approach at that. Of course, it may be that you are not in financial difficulty so MABS may not be appropriate. You could withhold repayments until they decide to write off your savings against your loan. This would have the added benefit of reducing your loan and freezing the interest. You could then resume your repayments until the loan is cleared. This may be reflected in your ICB record if they are members of ICB.


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