Going Guarantor coming back to haunt

My husband went gaurantor on a Credit Union loan six years ago for his brother. Brother has defaulted and has no means or willingness to sort this out. He hasn't answered any corresspondence and neither did we as we moved house and never got it. Yesterday we received a summons to appear in court over non payment of loan and so did husbands brother. Loan is 6,500. A few years ago when there were problems with the loan the CU wrote off the interest and so we are dealing with loan amount only. We understand what gaurantor means but need advice on how to handle this. Brother in law won't be paying up so its down to us. Can we negotiate with CU / solicitor ? What is the minimum monthly payment they might accept ? Should we sort it out or go to court ? Is our credit rating affected because we have had a summons issued ? Need this like a hole in the head so any advice appreciated. We have to contact CU solicitor tomorrow. thanks

my initial reaction is you should immediately engage a solicitor explain matters fully to him/her and have him/her appear in court o n your behalf. the fact that you did not get the correspondence due to changing houses is a key factor and most irish credit institutions will accept some repayment arrangment which you can affford.

greenstar said:

My husband went gaurantor on a Credit Union loan six years ago for his brother. Brother has defaulted and has no means or willingness to sort this out. He hasn't answered any corresspondence and neither did we as we moved house and never got it. Yesterday we received a summons to appear in court over non payment of loan and so did husbands brother. Loan is 6,500. A few years ago when there were problems with the loan the CU wrote off the interest and so we are dealing with loan amount only. We understand what gaurantor means but need advice on how to handle this. Brother in law won't be paying up so its down to us. Can we negotiate with CU / solicitor ? What is the minimum monthly payment they might accept ? Should we sort it out or go to court ? Is our credit rating affected because we have had a summons issued ? Need this like a hole in the head so any advice appreciated. We have to contact CU solicitor tomorrow. thanks

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Sorry to hear about your difficulty greenstar,
I wouldn't rely on the defence of moving house. Mention it but don't make it an excuse. Afterall, you were well aware of the interest write off and they got the summons to you.
Ring the CU or the CU solr. Ask to come to an arrangement to pay. Pick a small amount that they will be happy with.
Try and keep it out of court. If it goes to court you may have an instalment order imposed. That is far more serious than a CU arrangement.
Best of luck!

Are you members of the Credit Union? Or of another Credit Union where you are known?

Whether you are, or not, I think you would be better dealing with them directly rather than through solicitors. Call up the manager and arrange a meeting.

If that does not go well, you may need to engage a solicitor, but this will add to the expense. You may be better off just going to court and explaining your situation and your willingness to pay it over time.

Brendan

My experience has been if collection of a debt has reached the courts it is difficult for the local people in the bank/credit union to do anything. I feel appearance in court is important.

Absolutely. Court appearance is the only way. You will be surprised how many don't turn up. You are the guarantor, so have a responsibility; but once you advise you are willing to pay and what has happened to prevent this to-date the case should be put back to facilitate this. Once this has happened you should be in a better position to negotiate directly with the CU manager.

I hope my post didn't convey the impression that one should not turn up in court?

It is best to try and get the Credit Union to cancel the court case beforehand.

Speak to your Credit Union, but show up in court anyway to make sure that the case is disposed of as agreed.

And, of course, if the CU don't agree to doing a deal, turn up in court and explain yourself. The fact that you tried to discuss matters with the Credit Union should stand to you.

Brendan

Thanks for that. Spoke to CU and CU solicitor today. Both very nice and eager to sort things out. Turns out we did inform them we moved - hurrah - but they never updated their files so they are taking responsibility for that and there is no issue with us not responding to letters etc... Just for clarity let me explain that 3 years ago when there was an issue with this and the interest was written off we were at our old address and did respond to letters and helped get things sorted. It was only when we moved that we stopped knowing what was going on. Anyway my brother in law after encouragement from family members went to his CU and has re-nogiated payments which they have accepted and agreed on. So the issue is postponed for a while but we don't hold out much hope of this lasting and are in no doubt that in a month or two the account will be in arrears again. If and when this happens we are going to agree to pay the CU as small an amount they will accept and just pay it off over time. We would prefer not to go to court and have been assured that once its settled without a court judgement our credit rating is not affected. Lesson for the day - dont' go gaurantor. ! Appreciate the time you all took to reply.

That is good news. I think you are entitled to know whether the payments are being made and you should carefully follow this up

Well done. You did very well to make an arrangement at branch level and keep this from the courts. And thankfully money was not spent on engaging a solicitor.

Going guarantor is indeed a big commitment. As this is a credit union loan it will not show on the Irish Credit Bureau (ICB). If the loan was with a bank, your credit rating would have suffered years ago when the first payments were missed. This should be a cautionary tale for everyone. Thankfully, you have been very, very lucky.

I would agree with dewdrop that it is worth asking the CU to advise you if the payment arrangement lapses again. They should pick up the phone and call this time.

VOR said:

As this is a credit union loan it will not show on the Irish Credit Bureau (ICB). If the loan was with a bank, your credit rating would have suffered years ago when the first payments were missed.

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Not necessarily true, about 50 credit unions have joined the ICB and the number is increasing. The list of credit unions that are members of ICB are available here:

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ontour said:

Not necessarily true, about 50 credit unions have joined the ICB and the number is increasing. The list of credit unions that are members of ICB are available here:

[broken link removed]

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Fair point. Many CUs have joined recently and will post up missed payments on new loans as quick as any bank or credit card company.

Here's an idea...why doesn't your husband clear the loan? That's what going guarantor means - you're responsible for the debt if the borrower defaults. No doubt those who went guarantor during the boom will be "talking to Joe" and blaming the banks for the fact that they have to honour a contract and follow through on their promise. "Sure the bank told me to" and "the broker said it wasn't a big deal" will more than likely be the mantras of choice. Your husband now owes the money...that's the bottom line.

Thanks for the crude advice rambo - we know what gaurantor means and will honor if necessary. Our first point of call was to try and sort it out without fuss and with the actual borrower paying back the loan - I don't think that unreasonable. As as the celtic tiger never roared in this house anyway clearing a 6,500 loan that we didn't get the benefit of wouldn't be as easy as you suggest. Anyway hopefully we are close to a resolution on this one for now anyway. Are in process of sorting out direct debit payments by brother in law to CU and have agreed with CU that we be informed whenever payments are missed. Thanks again all.

I agree with John Rambo, I'd prefer to sort it out myself as being guarantor means ultimately you are liable and your brother in law quite clearly cannot be trusted. Meanwhile the clock is ticking and the interest increasing plus it's hanging over your heads. Your husband could then call on his brother each payday/dole day to get a repayment directly from him.

I'd disagree with John Rambo and Bronte. The brother-in-law has shown willing and some initiative in going to the CU and re-arranging the repayments. I think it is fair to at least give him the chance of complying with his own arrangement. If he fails to do so, they have clearly indicated that they are planning to step in and shoulder the burden.

Socrates you need to re read the first post, the BIL has defaulted, has no means, is not willing, doesn't answer correspondance and we are now at the Summons and Court stage. Also it was mentioned that the BIL won't be paying. This is quite clearly a person not to be trusted.

I did read the first post and then the 9th post, which as I see it amends the position of the first post somewhat. The OP clearly indicates in that they do expect the BIL to default again but are willing to give him one last chance. Seeing as how he has re-engaged in the process by approaching the CU and negotiating a repayment plan I can't see that it is unreasonable of them to do so. They don't intend on letting it get to court and they do intend on honouring the debt. They do unfortunately anticipate that they will have to take on the debt rather soon. Unhappily I would agree with you that it is very likely that they will have to repay it. He hasn't proved himself in the past.