# In credit union debt / arrears mounting up.



## kopatroopa (18 May 2012)

Hi All,

Looking for any advice what regarding credit union loan arrears. 

I have unfortunately fallen on hard times and am in a bad situation with credit union.

I have only ever had €850 savings with credit union, I got my first loan around 10 years ago for about €5000 or so, since then have increased it a few times, the last time I increased it was about 5 years ago to about  €15,000. I pay back €320 per month via standing order, the set loan repayment amount is €312 per month. I missed payments 4-5 times last year and once this year. Arrears currently stand at €2000. They have sent a few letters about it, one after each installment was originally missed. 

I rang them about it yesterday, I had been putting this off for months as I was terrified of what they would say, and was petrified of dealing with the issue, however had I known how nice they were gonna be I'd have rang them ages ago.

Basically they told me to call in to discuss temporarily restructuring loan repayments (to a lower amount) to make it a but easier to ensure payments are made. So if I do lower monthly repayment amount that comes off the loan, will any extra i pay go off arrears? As my main focus is to get this paid off. Also I know my shares are only €850 but could any of this at all go off the arrears as I have no cash lump sum to pay off it? Also does the arrears amount still increase with interest even if loan repayments are being made?

Any advice hugely appreciated, 
Hope all the above makes sense!
K


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## pmorrissey (19 May 2012)

hi 

many people get cofused about this , the arrears are only an indication of how many payments you have missed , e.g if you missed 10 repayments over a year and your weekly repayments were 20 per week , the arrears would be 200 . the amount you have to worry about is the outstanding loan and the outstanding interest , this is how much you owe , it is best to go in and discuss your situation , credit unions are ver symathetic to members whom are in financial trouble and whom work with them . Interest does not go the arrears as it is not part of the loan , also interest is not calculated on interest it is calculated daily ( in most cases) on the outstanding balance , so the lower your loan goes the less interest you pay , payments at the start will only come off interest as the interest has to be cleared first before you start hitting principle , call and get the loan restructured and get baqck on track as soon as possible , remember too that many credit unions are now members with ICB so it is in your ionterests to get the loan restructured to avoid having a poor credit history


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## TrebleT (16 May 2013)

If you restructure your loan say from a 5 year loan to a 7 year loan it will in fact be issued like a new loan lowering your payments and it will be like you are starting fresh so the arrears should be gone, so if your current loan is 312 pm then when it is reset it will be say 240 for example ( just an example ) you will probably pay more interest with it being reset but its better then having a bad credit history as remember all credit unions now submit to the Irish Credit bureau.  Any loans that were issued before 2013 wont be registered with ICB but any new loans will be.  You cannot use your shares to clear off the arrears as the rules of the credit union state what you must have shares to get a loan.  I am unsure however how you got 15K with just 850 shares that seems mad as I have 3k shares and at a push got a loan of 7k.  Best of luck sorting it out and dont worry the credit union have your best interest at heart.


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## Slim (17 May 2013)

Hi Kopatroopa

You should write to your credit union and ask them to suspend interest on your loan. Thay can do this but will be reluctant. If this does not happen, I suggest you do not make any payments for 53 weeks, at which point they will have to write it off and stop interest accruing. It is hard to do this to your friendly credit union, but you can at least then work on reducing the debt.

I do not think they will issue a new loan. They may accept lower repayments for a period.


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## Slim (20 May 2013)

Anyone1 said:


> If they refuse to pay a loan for 53 weeks, they are going to end up in Court. So your "advice" is probably the worst thing to do. OP pop into the Credit Union and discuss the situation, just be truthful and explain your position and in most cases something can be done to help you repay the debt.


 
Perhaps, but in the current climate, I think it unlikely the OP will end up in court before 53 weeks. After 53 weeks, they can discuss te repayment of outstanding loan without the added burden of interest. By all means, talk with your credit union. They can be extremely helpful.


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## roker (20 May 2013)

Do you have Guarantor?  They may make them pay, is this not Credit Union practice


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