# Credit Union arrears question



## bogartsqueen (22 Nov 2010)

I have over 6000 savings in the credit union.  I recently fell behind in my loan and now I am in arrears by €800.  I don't have the cash to clear this. Would they let me take some of my savings out to clear the arrears?

The balance I have left on my loan is approx €22000


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## stefg (22 Nov 2010)

It's worth talking to them but I think they will be reluctant.  The savings (shares) are usually used as security against loans and they usually require the savings to be at least 30% of the total loan amount (though this varies in different Credit Unions).


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## fla (22 Nov 2010)

Usually the credit unions only let you touch your shares against a loan if the loan amount is less than the shares, although they seem to be more flexible now.  Best bet is to go into your credit union and discuss it with them.  If you contact them by phone, you usually get a no from them.  I had a similar situation and when I phoned them they were adamant that this could not be done, but then I went in to my credit union and discussed it with them and they agreed.  Good luck.


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## donee (22 Nov 2010)

most credit unions will let you do a share transfer for your arrears but why dont you ask them to clear your loan off entirely, they may not like it but its your money!


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## ontour (22 Nov 2010)

donee said:


> ..... they may not like it but its your money!



Not as simple as that, there is a relationship between your savings and your loan when you borrow from a credit union.  There is no automatic right to withdraw shares or deposits if they are below the value of the loan.

OP, go and talk to the credit union, be prepared to explain why you fell behind and whether it is likely to continue.  Do you need to change your repayments?  Check if there is some money going in to shares or deposits from each repayment as this often happens where you have a fixed payment but the interest portion is reducing.  As the credit union is likely to pay a small dividend or in many cases, no dividend, request that a significant portion of your shares are offset on the loan to reduce your monthly payment.  If needed  use this to reduce your monthly payment or if possible keep the same payment and pay off the loan sooner.  Taking 5k of your 6k off the loan would probably save you between €300 and €600 per year in interest payments.


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## Seabhac Ait (22 Nov 2010)

Under the Credit Union Act, 1997, discretion rests with the individual credit union. Contact the Credit Union Manager or the Credit Controller - outline your circumstances and ask that they consider a Share-to-Loan transfer. However, do discuss the Life-Savings Insurance implications with them also, particularly if you are over beyond yous 55th birthday. Life Savings insurance is a particularly valuable insurance, particularly if it is the only life insurance you've got, so do ask what impact the proposed transfer will have on it.


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## pmorrissey (23 Nov 2010)

Under Rule 38 of the Credit Union Act no approval maybe given by the board to withdraw shares ( savings ) if after the withdrawal the value of the members shares were less than 25% of their outstanding liabilities 

So Bogartsqueen,  in this case you should be allowed to take 500 from shares to put against the arrears , well actually a small bit more as when 500 taken off then loan balance goes to 21,500 
There is a benefit as one contributer mentioned above of keeping your shares esp if under 55 as they are insured up to 100% and the percentage decreases as you get older - this means if you die that your shares increase by 100% up to a certain limit depending on your credit union
you could always tell the credit controller that you want to pay a little extra each week to catch up on arrears 
In a credit union you are penalised for having arrears - it does affect your ability to borrow but there is no interest charged on interest


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## Crugers (23 Nov 2010)

pmorrissey said:


> ...So Bogartsqueen, in this case you should be allowed to take 500 from shares to put against the arrears , well actually a small bit more as when 500 taken off then loan balance goes to 21,500...


 
That should read could as in _"...in this case you could be allowed to take 500 from shares..."_ 
It requires the specific approval of the Board and in some CU's and some cases they may allow you to reduce your shares to 25% of your outstanding loan balance as allowable in the CU Act 1997.
see http://www.irishstatutebook.ie/1997/en/act/pub/0015/sec0032.html#sec32


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## pmorrissey (26 Nov 2010)

Crugers , absolutly right , could is more accurate


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