Came across this situation during the week and would like some advice from people that has experience of this or from someone who works in this area please. Sorry for the length of the post!!!
Mrs Blogs who has a credit union account and has €3000 in her account. She works part time and earns c. €7000 P.A. She has perfect track record repaying loans over the last 10 year. Mr Bloggs earns c. €60000 P.A. but is not a member of credit union. They have mortgage repayment of €900 per month.
Mrs Bloggs seeks a loan for €25000 in January 2007 with a repayment of €330 plus interest per month. On the loan application it asked for Mr Bloggs annual income, but he is not named as a guarantor on the loan. CU advances loan to Mrs Bloggs.
Mr Bloggs business suffers badly due to recession and his income reduces to c. €40000. They get in to financial difficulty and Mrs Bloggs starts missing payments on the CU loan but manage their mortgage, she miss’s 9 months repayments. They bury their head in the sand until they start receiving solicitors letters. They deal with this through their solicitor and they agree to repay €200 per month. They have increased this repayment to 350 per month over the last year and are quite proud of themselves of course.
She is now c. €7000 in arrears. She receives a phone call from the CU loan officer which asks her to come in as they are happy with the repayments and would like to restructure the loan. The loan officer advices her to bring in her husband as well.
Mr and Mrs Bloggs meet with loan officer and she said that CU would like to restructure the loan but will only offer this if Mr Bloggs will go as a guarantor on the loan (don’t forget that Mr Bloggs still has perfect credit rating) Mr Bloggs agrees to this and signs paperwork for same but has to bring in proof of income etc..
This is where I come in. I receive a phone call from Mr Bloggs and he tells me the story. I tell him not to do this as if things get bad again and they have to miss a repayment his credit rating could be affected. He goes back into CU and meets loan officer and says that he does not want to go as guarantor. Loan office says that CU will not restructure the loan as Mrs Bloggs income cannot support the loan on her own. Mr Bloggs say’s Mrs Bloggs income has not changed from the time she took out the loan so they should not need him on the loan. Loan officer says that their lending critiara has changed and that they would have taken his income into account when they issued the loan, loan officer also states that if Mr Bloggs does not go as guarantor for the loan that the CU reserves the right to take legal proceedings and take them to court and get a judgement against them as they loan is over €7000 in arrears.
So my question is should the Bloggs go to court and plead that the CU were completely reckless in giving a loan of €25000 to someone with such a low income and with only a balance of €3000.
Second question. Obviously the CU is using heavy handed tactics and this may warrant a complaint to the FSO, but is there anything stopping the CU from restructuring the loan based on Mrs Bloggs income based on the fact that they originally issued the loan using the same information and income…
Many thanks for the reply’s
Mrs Blogs who has a credit union account and has €3000 in her account. She works part time and earns c. €7000 P.A. She has perfect track record repaying loans over the last 10 year. Mr Bloggs earns c. €60000 P.A. but is not a member of credit union. They have mortgage repayment of €900 per month.
Mrs Bloggs seeks a loan for €25000 in January 2007 with a repayment of €330 plus interest per month. On the loan application it asked for Mr Bloggs annual income, but he is not named as a guarantor on the loan. CU advances loan to Mrs Bloggs.
Mr Bloggs business suffers badly due to recession and his income reduces to c. €40000. They get in to financial difficulty and Mrs Bloggs starts missing payments on the CU loan but manage their mortgage, she miss’s 9 months repayments. They bury their head in the sand until they start receiving solicitors letters. They deal with this through their solicitor and they agree to repay €200 per month. They have increased this repayment to 350 per month over the last year and are quite proud of themselves of course.
She is now c. €7000 in arrears. She receives a phone call from the CU loan officer which asks her to come in as they are happy with the repayments and would like to restructure the loan. The loan officer advices her to bring in her husband as well.
Mr and Mrs Bloggs meet with loan officer and she said that CU would like to restructure the loan but will only offer this if Mr Bloggs will go as a guarantor on the loan (don’t forget that Mr Bloggs still has perfect credit rating) Mr Bloggs agrees to this and signs paperwork for same but has to bring in proof of income etc..
This is where I come in. I receive a phone call from Mr Bloggs and he tells me the story. I tell him not to do this as if things get bad again and they have to miss a repayment his credit rating could be affected. He goes back into CU and meets loan officer and says that he does not want to go as guarantor. Loan office says that CU will not restructure the loan as Mrs Bloggs income cannot support the loan on her own. Mr Bloggs say’s Mrs Bloggs income has not changed from the time she took out the loan so they should not need him on the loan. Loan officer says that their lending critiara has changed and that they would have taken his income into account when they issued the loan, loan officer also states that if Mr Bloggs does not go as guarantor for the loan that the CU reserves the right to take legal proceedings and take them to court and get a judgement against them as they loan is over €7000 in arrears.
So my question is should the Bloggs go to court and plead that the CU were completely reckless in giving a loan of €25000 to someone with such a low income and with only a balance of €3000.
Second question. Obviously the CU is using heavy handed tactics and this may warrant a complaint to the FSO, but is there anything stopping the CU from restructuring the loan based on Mrs Bloggs income based on the fact that they originally issued the loan using the same information and income…
Many thanks for the reply’s
