# Settling a 10 year old credit union debt / new Central Bank register



## Sgt_Pepper (14 Nov 2017)

Hi. My sister-in-law recently approached my wife and I looking for a loan to help her out of a long-term mess. It's her first time asking her for help despite being in financial trouble for quite some time. I was reluctant tbh as she's clueless with money and I suspect won't learn a lesson from this. But, she has been good to us with her time and with our own kids over the years, and despite a lot of personal problems, immaturity, heavy drinking and reckless spending for the last 15 years, she seems to have turned a corner this year. 

Back in 2008 she got a CU loan for about 16k or so. She defaulted within 6 months and although she made scattered repayments the interest is now 10k and the loan itself 13k. We knew she was in financial trouble but we were thinking maybe 3 or 4k. I haven't seen any CU statements apart from one small printout from the CU from 2 weeks ago and it said 13k Balance, 10k interest and "home improvements". My wife on the other hand works in a bank and has gone through everything with a fine tooth comb.

The CU haven't been pushy with her beyond sending out letters - at least this is what she told us in the last few weeks. Last week, we went with her to meet the CU credit controller. They said they sent out over 200 letters to her. We explained we were willing to help her out and could they give us a settlement amount we could work towards. They were initially reluctant to give us any figure but said the 13k was members money and would have to be repaid in full. There could be no write down on that figure. She did however tell us that she could definitely look at the interest and see what she could come up with once the 13k was paid. 

So, my wife and i discussed it and decided we'd help so we again went to meet the CU last week with her and we told them we could give them 6k within a day or two, but we needed a settlement figure before we'd commit to any more. That changed the tone of the conversation instantly and although they were very helpful all along, they were now a lot more interested and told us if we could pay the entire 13k off this side of Xmas they'd settle for approx 1k interest. So 14k out of 23k will settle it. We thought that was more than fair, so we gave them 6k the next day , and I am going to give them a further 7k this week. 

One other important piece of information is that last week when she told us of the debt we asked her to write to the ICB and get her own credit report. The loan wasn't registered and didn't appear. To be doubly sure I asked the credit union themselves at the last meeting and they too confirmed it wasn't registered. So unless the CU tell the ICB about this loan in the interim, it won't appear at all even when settled? 

The reason this is of interest to us is we were hoping  by paying off this long standing debt it would save her 5 years in purgatory...specifically, that it would neither appear on the ICB nor the *new central bank register due to go live in early 2018 some time*. I looked at the Central bank website and it states very clearly that all loans that were on lenders books from last June on would be on the register. So, although it's quite clear what they are saying, I was wondering if anything could be done if I cleared off her debt entirely this week? It's probably too late, though the CU said they had not yet furnished the information to the CB as I made a point of asking. Mind you, they could have just been saying that too in case I changed my mind about paying them, but it wouldn't have affected our decision to pay down her debt one way one the other. 

The central bank register website says that car loans will not be included in the gathering up of this information. This was a car loan she borrowed for, but the loan statement says "home improvements". She doesn't remember what she told the CU first day on her application But would it be possible for the CU to change it from a home loan to car loan and thereby not have it appear on her record?

Finally, as I've never seen a debt settlement in action on paper or otherwise, when I pay the money over will she get some kind of statement saying the loan is now finished or a letter or something obvious? Thanks all.


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## RedOnion (14 Nov 2017)

Hi,

For ICB reporting, a lender needed a borrowers permission to firstly run a credit check, and secondly to report the loan to ICB. As a lot of credit unions weren't members of ICB until recent years there are a lot of historical loans that weren't, and never can be, reported (you might have heard stories of people borrowing their mortgage deposits from CUs before the crash).

However for CCR, all credit unions have to report all loans that were live as at or issued from 30th June. Unless the CU had already written off her loan, it should get reported to CCR. They might not have furnished the data yet as there was a system update required, and all data probably has to be manually reviewed before it's submitted, but they've a legal obligation to submit it unless it was already written off.

However, there will be a long transition phase where ICB is still relied on until CCR builds up enough historical information so it's hard to know how this will impact her credit history in the short term.

The car loan piece is more to do with a loop hole around the legal classification of hire purchase (including PCP). All personal loans are included regardless of what they were for.

As regards confirmation of settlement, in my experience you literally receive a statement showing the loan balance going to zero. 

You might get advice on what you should seek in writing before making the settlement to ensure the situation doesn't change once they've the money. It should outline an amount as a full and final settlement. (I'm more familiar with this on corporate loans.)


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## Sgt_Pepper (14 Nov 2017)

Thank you or the clarification. Does "written off" mean written of their books as an accountancy exercise or written off as in loan closed, interest stopped, and no longer active? They did stop the interest 3 or 4 a few years ago. Would that constitute the loan being written off? Thanks for prompt response.


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## star32 (15 Nov 2017)

I am in the process of preparing the loans and data information that will be uploaded to the CCR within our credit union. All loans that have been written off since roughly 1992 will be uploaded except for outstanding balances below 500.


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## Sgt_Pepper (15 Nov 2017)

Thanks Star32. I've been looking through the previous letters and statements she has this morning in lieu of paying off the loan later today, or tomorrow morning at the latest. I found it strange the CU would give her a loan for "home improvements" when she is and always has been renting. No that it mater now. Also the CU never asked her for payslips or any evidence of income when applying. Just goes to show their own lending practices were suspect O'd reckon. On one statement from a few years ago it does clearly say "withdrawn" so it seems the loan was written off. 

Just a final clarification please Star32: You're saying that loan amounts under 500 are not required to be uploaded, but in our case seeing as the CBR information will be backdated to June 2017, it will be reported even if we clear the loan today and bring it under 500? Thank you.


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## star32 (15 Nov 2017)

Regarding home improvement loans to renters - some members are long term renters and they would still want to do home improvements despite of this. Now we are regulated and audited and proof of income is always requested. However back in the day maybe 6-7 years proof of income wasn't always sought. Some credit unions based their decisions on the members loan and savings history and on a savings ratio. All credit unions had different criteria. Again that is all changed now.

Yes this loan will probably be uploaded. The credit union does have the ability to exclude it but again there is strict guidelines for doing so and the central bank have set these out.

If you do clear it - the loan will show settled and will remain on the CCR for 5 years from the final payment.


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## Slim (16 Nov 2017)

"Regarding home improvement loans to renters - some members are long term renters.."

'Home Improvements' was a catch all category for credit unions to use so as to avoid the necessity for the member to bring in invoices from car dealers etc. Scrutiny did not extend to builders' quotes etc, at that time.


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## Sgt_Pepper (16 Nov 2017)

Made final payment today and CU, after spending some time consulting legislation and trying to get clarity on it themselves,  confirmed it would appear on CCR as per CB rules. She has agreed to pay us back 150 a week, but now i'm thinking she may be better off applying for a loan again early in the new year from her own bank to start repairing her credit rating as no-one will touch her as soon as that goes on the CCR files.


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## Sgt_Pepper (10 Apr 2018)

*Update*: She recently received a copy of her credit report from the newly established Central Bank Credit Register. It does indeed show the loan but gives no obvious or detectable indication (to me at least) that the loan was 'settled' for less money than was owed. It looks on the report as if the loan was repaid in totality, but 26 payments were missed. Again, there's no indication there was a write-down. It doesn't look as bad as we thought it would. I can edit out all of the the identifying information on it and perhaps upload it directly to the site moderator for further discussion if that's something of mutual interest.


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