# Bad practice by the credit union?



## capslock (4 Jul 2013)

At the end of last year I agreed a lower repayment amount on my credit union account for three months after my husband lost his job. I spoke with the credit control department and it was agreed I would repay €150 for three months rather than the scheduled €225. I received a letter stating same.

Following the three months, I got a letter stating I was in arrears. I had been prepaid before the agreement. It transpired that the agreed lower repayment amount was not amended on their system and I was accruing arrears every month. I questioned this and was told it is their policy to agree to accept a lower repayment but it is not reflected on their system so therefore the customer is building arrears on a monthly basis, without the customer having been advised of this. I think this is shocking! 

I don’t think it was unreasonable of me to assume that because the lower amount was agreed in advance with the Credit Union I would not be building arrears. To me, this was no different than if I was to change the direct debit amount myself through my bank and not inform the Credit Union at all. I do not see the point of me even contacting them in the first place.

What do other people think?


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## elcato (4 Jul 2013)

Seems reasonable for the CU to inform you that you are in arrears of the original agreement. That is basically it but you have informed them of this so there's no problem. At the end of the day the outcome is the same. You owe the arrears and probably interest on it. Personally I would not bother informing them in future seeing as it makes no differance.


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## julius128 (4 Jul 2013)

Usually there are two ways when CU deal with members in arrears 

1) They agree few months of lower payment (temporary solution) which you will be out of delinquency cycle and they will not contact you during this period if you keep up to temporary payments. However from CU perspective your arrears in relation to central bank is continuously building up according to your credit agreement repay amount.

2) They permanently reschedule your repayment which means they issue new credit agreement and you sign that. From member's perspective loan has been rescheduled for the remainder of the loan term with reduced amount, this solution will have immediate impact for credit union and member also. 
CU should set aside at least 20% of loan principal on reserve at all time for your loan according to central bank rule, and your loan goes to Rescheduled category which highly likely prevent you getting another loan from CU for good while. So your loan was so costly to CU.

Hence most CU would not reschedule a loan immediately which means your central bank arrears build up according to original repay agreement in your credit agreement but you will be due to pay that at the end of temporary agreement. This temporary agreement has benefit to both side, member(in long term as your loan was not categorised as reschedule) and CU which was not required to immediately set at least 20% of your loan aside on reserve.

I hope I could explain it as simple as possible without going into technical information.


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