# Credit Union business loan and trading ceased



## Bronte (19 Mar 2009)

What would happen someone with a credit union business loan of circa 100K if the business (small retail) ceases trading due to the current economic climate.  Single parent owner, only asset is a house now worth less than the mortgage.  Person will be on the dole, but wishes to try and repay the loan.  I assume the credit union will put a judgement mortgage on the house, would they also force a sale?  What repayments do you think they would accept.   Is there any chance they would write it off as a bad debt?  How do they approch the credit union.  They think they could manage 50 Euro a week repayment.


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## fobs (19 Mar 2009)

At €50 a week the loan would never be paid off. I thought all credit unions were not allowed to give business laons and all loans had to be repaid in 5 years. I don't think a credit union could write off a loan as all the member of that credit union would end up paying. Has the person any assets of value that can be sold to reduce the loan?


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## mf1 (19 Mar 2009)

How on earth did they get that loan? Whatever about banks lending , Credit Unions should never lend that kind of money to someone with no assets. That is absolutely criminal. 

What on earth did the borrower think they were doing , borrowing that kind of money? 

No, CU cannot write it off but equally, there is nothing worthwhile to  attach a judgment to. If the house is in negative equity. 

The one thing I will say though is the CU should get a judgment and should register it as a judgment mortgage. I have seen debtors circumstances improve with the passage of time. 

mf


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## Cayne (19 Mar 2009)

mf1 said:


> What on earth did the borrower think they were doing , borrowing that kind of money?


 
People tend to borrow to get business up and running. When you think about it people spent a lot more on modest houses in the past few years....


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## ontour (19 Mar 2009)

Does the business have any assets that can be sold to reduce the loan?  Something useful must have been bought with €100k.
What is the loan secured against?  Was it given to the individual or to the business?  If the account is in the name of the business and there is no security then the credit union decided to take a significant risk and will have to live with the consequences.

The best advice is to go and talk to the credit union.  If the individual is personally liable, they may stop charging interest and take €50 a week if that is what is available.

It might be even better to talk to MABS first to get some independent advice and then talk to the credit union.


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## Bronte (20 Mar 2009)

mf1 said:


> How on earth did they get that loan? Whatever about banks lending , Credit Unions should never lend that kind of money to someone with no assets. That is absolutely criminal.
> 
> What on earth did the borrower think they were doing , borrowing that kind of money?
> 
> ...


Well to answer your queries and hopefully get some advice for the person it was a business loan and Credit Unions give out business loans and I think mortgages too.  In fact I think every institution in Ireland was handing out money like no tomorrow for the last 10 years.  It was not secured on any asset but they knew that a house existed at that time with plenty of equity plus a person with a good track record and loan would have been given based on other dealings with the same family.  Some businesses don't have assets when they start off.  It was a smaller loan at the beginning to start off the business but ran into trouble and tried to trade their way out of it but crisis has decimated the business.   The reason the loan was given was because the credit union thought the business made sense.  In relation to a judgement mortgage I think that is the way they will go but I was wondering if there are any other options they could take.  Such as what Ontour said, put it to 0 interest and then the capital could be repaid.  After all they are doing it for developers etc so why not the little people.


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## carrielou (20 Mar 2009)

Isn't the credit union in Mitchelstown Co. Cork in big trouble over some of these business loans.  Heard it on new few weeks back.


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## Bronte (2 Apr 2009)

To come back to this, a meeting was held with the manager of the Credit union who said not to worry and they will come to some arrangment.  Possibly an interest moratorium.  We are getting the impression that this loan is nothing as compared to others.  Will let you know how it pans out in a couple of weeks when the next meeting is planned.


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## Centaur (9 Apr 2009)

Credit Unions are being told by the Regulator to cut back on lending generally but especially to small businesses.

The same Regulator's office is encouraging banks to lend to small businesses.

CU liquidity in general is far better that the banks - it doesn't make sense.


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## HBeth (1 Oct 2012)

Just wondering if you have an update on this. I am in the same boat trying to do a deal with them at the moment and to talk to someone would be great.


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## Bronte (2 Oct 2012)

Yes they are doing deals, negotiate hard.


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